UNIVERSITY  OF  CALIFORNIA 
AT  LOS  ANGELES 


GIFT   OF   CAPT.   AND    MRS. 
PAUL  MCBRIDE  PERIGORD 


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NEW  YORK 
McCLURE,  PHILLI' 


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Copyright,   1906,   by 

McCLURE,   PHILLIPS  &  CO. 

Published  January,   IQ06  N 


TO  MY  COUNTRY 

IN  THE  APPROACHING   HOUR 

OF  THIS  THE  THIRD  VITAL  CRISIS  OF  HER  HISTORY 

IN  THE  FAITH  THAT  TO  THIS  STANDARD 

WHEN  ONCE  THE  INVISIBLE   FOE  IS  DISCERNED 

THE  WISE  AND  THE  HONEST,  THE  BEST  OF  HER  LIFE-BLOOD 

WILL  REPAIR  IN  HER  DEFENSE. 

THIS  BOOK  IS  INSCRIBED 


ABRAHAM   LINCOLN 

Speaking  in  Independence  Hall,  February  22,  1861: 

"  I  am  filled  with  deep  emotion  at  finding  myself  stand- 
ing in  this  place  where  were  collected  together  the  wis- 
dom, the  patriotism,  the  devotion  to  principle,  from  which 
sprang  the  institutions  under  which  we  live.     You  have 
kindly  suggested  to  me  that  in  my  hands  is  the  task  of 
restoring  peace  to  our  distracted  country.     I  can  say  in 
return,  sir,  that  all  the  political  sentiments  I  entertain  have 
been  drawn,  so  far  as  I  have  been  able  to  draw  them,  from 
the  sentiments  which  originated  in  and  were  given  to  the 
world  from  this  hall.     I  have  never  had  a  feeling,  politi- 
cally, that  did  not  spring  from  the  sentiments  embodied 
; ,  in  the  Declaration  of  Independence.     I  have  often  pon- 
IQ  dered  over  the  dangers  which  were  incurred  by  the  men 
^!  who  assembled  here  and  framed  and  adopted  that  Dec- 

-  laration.  I  have  pondered  over  the  toils  that  were  en- 
dured by  the  officers  and  soldiers  of  the  army  who  achieved 

^  that  independence.     I  have  often  enquired  of  myself  what 

-  great  principle  or  idea  it  was  that  kept  this  confederacy 
so  long  together.    It  was  not  the  mere  matter  of  separation 

•  •  of  the  colonies  from  the  motherland,  but  that  sentiment 
in  the  Declaration  of  Independence  which  gave  liberty 
not  alone  to  the  people  of  this  country,  but  hope  to  all  the 
world,  for  all  future  time.  It  was  that  which  gave  promise 
that  in  due  time  the  weights  would  be  lifted  from  the 
shoulders  of  all  men,  and  that  all  should  have  an  equal 
chance.  This  is  the  sentiment  embodied  in  the  Declaration 
of  Independence." 


CONTENTS 


PART  ONE:   ECONOMIC  COST 

PAGE 

Introductory xiii 

I.  Value      , 3 

II.  Production  and  Consumption i6 

III.  Specialization  and  Coordination     ....  35 

IV.  Exchange 53 

V.   Barter 69 

VI.   Emulation    and    Competition 89 

VII.  Specialization  in  Barter 1 1 1 

VIII.  Distribution 148 

IX.  The   Economic  Organism 195 

X.  The   Growth   of   Dissipation 231 

XL   Supply    and    Demand 316 


PART  TWO:  THE  ETHICAL  COST  AND  THE 
FUTURE 

I.   Prefatory 349 

II.  The   Ethical   Nature   of   Barter     ....  359 

III.  The  Cost  to  the  Losers 369 

IV.  The  Cost  to  the  Winners 381 

V.  The  Cost  to  the  Community 398 

VI.   Capitalism   and   Labor 503 

VIL  The  Future:  Progress  without  Poverty     ,     .522 

VIII.  Ethical  Synthesis 575 

Epilogue 602 

vii 


LIST   OF    ILLUSTRATIONS 

The  Washington  Arch Frontispiece 

"  Let  us  raise  a  Standard  to  which  the  Wise  and  the  Honest 
can  repair.     The  event  is  in  the  hand  of  God." 

FACING    PAGE 

The  Congressional  Library 347 

"  The  Co-operative  Distribution  of  Information." 

Advertising  Signs 491 

"  The  Competitive  Distribution  of  Information." 

Grant's  Tomb  and  the  Hudson  River      .     .     .571 
"  Let  us  have  Peace!  " 


IX 


LIST  OF   DIAGRAMS 


FIG.  PAGE 

1.  Emulative    Efforts  .          .          .          .^         ■»         .      lOO 

2.  Competitive   Efforts lOO 

3.  Natural  Coordination    ......      127 

4.  Coordination  distorted  by  Capitalism        .  .          .128 

5.  Natural    Coordination  .          .          .          .          .136 

6.  Coordination     distorted     by     Capitalism     and     Land- 

lordism   ........      137 

7.  The  Economic  Organism:     Section  .  .  .198 

8.  The  Economic  Organism:     Exterior  .  .  .      200 

9.  The     Economic    Organism:      Section     displaying    the 

Population  which  absorbs  the  Cost  of  Competition 
— pure    Barter   and    Barter-cost    being    distinguished     219 

10.  The  Fate  of  the  Individual   Producer's   Productivity.     222 

11.  The  Comparative  Growth  of  the  Four  Classes:    Popu- 

lation       ........      252 

12.  The  Growth  of  Dissipation  and  the  Inefficiency  of  the 

national    Economic    Organism      ....      254 
12a.   The  Advance  of  Invention,  Science  and  Art,  and  what 

we  get  out  of  it        .  .  .  .  .  .257 

13.  The  Growth  of  Activity  of  Class  A  proportionately 

to  that  of  Class  D      .....  .      259 

14.  The  Comparative  Growth  of  the  Four  Classes:    In- 

come       ........      260 

15.  The   Comparative   Growth   of    Productive   and   Com- 

petitive Activities:    Aggregate   and    Individual        .      268 

16.  Comparative  Percentages  of  Unemployed  in  the  Four 

Classes       ........     270 


vii  LIST   OF    DIAGRAMS 

FIG.  PAGE 

17.  Comparative   Percentages   of   Unemployed    in   Several 

Avocations         .  .  .  .  .  .  .271 

18.  Comparative    Percentages    of    Unemployed    in    several 

Avocations  of  Negro  population   .  .  ,  .271 

19.  The  Decline  of  Horizontal  and  the  Growth  of  Vertical 

Competition       .......      273 

20.  The  Tendencies  of  the  Times  in  Factory-organization     278 

21.  The   Growth   of    Homicide   and    Hanging:      Chicago 

Tribune's   Statistics  .....      308 

22.  The  Parallel  Growth  of  Economic  Dissipation,  Crime 

and  Suicide       .           .           .           .          .           •           •  3ii 

23.  The  Curve  of  Demand            .....  323 

24.  Demand  and  Supply  Curves,  and  the  Market     .           .  329 

25.  The   Expansion  of   Production   and   Exchange  by  the 

Abolition  of  Barter    .  .  .  .  .  .561 


INTRODUCTORY 


A  GLANCE  at  any  one  of  the  outbursts  of  civili- 
L\  zatlon  which  history  has  recorded  in  the  past 
X  -V.  reveals  the  world  as  primarily  occupied  with, 
successful  at,  and  characterized  by  some  one  principal  line 
of  effort.  Egyptian  monuments,  Phoenician  commerce, 
Greek  art,  Roman  law  and  politics — each  of  these,  to 
the  student  of  history,  means  a  tremendous  picture  of 
human  activity.  The  spectacle  of  an  entire  people  given 
over,  for  generation  after  generation,  to  the  development 
and  perfection  of  some  task  assigned  to  it  by  the  force  of 
destiny  is  inevitably  a  sublime  one.  The  task  is  a  need 
grown  out  of  the  world's  evolution.  The  doing  of  it 
involves  that  devotion  to  the  ideal  which  carries  the  race 
of  man  to  its  highest  step  toward  the  divine.  The  fruit 
of  it  is  a  solidification  of  an  additional  course  of  masonry 
in  the  edifice  known  as  human  progress,  upon  which  may 
be  reared  the  later  superstructure  as  upon  a  foundation. 
Hidden  though  be  the  original  foundations  in  the  depths 
below,  unrevealed  though  the  Architect's  final  plan,  the 
splendor  of  the  whole  is  unquestioned.  Devout  admira- 
tion is  the  only  emotion  possible  to  him  who  approaches 
the  study  of  the  structure  in  its  most  temporal  detail. 
Such  sentiment  has  characterized  the  serious-minded  of  all 
ages. 

A  similar  glance  at  the  age  in  which  we  live  reveals  its 
keynote  and  countersign  to  be  the  production  and  distri- 
bution of  wealth.     However  essential  to  daily  existence 


xlv  INTRODUCTORY 

may  have  been  this  occupation  at  all  times  and  places, 
hitherto  it  has  been  felt,  by  the  unconscious  philosophies 
of  those  times,  to  be  a  necessary  evil  and  has  been  rele- 
gated to  individuals  or  to  classes  who,  whatever  their 
power  for  the  moment,  were  not  freely  considered  as  of 
the  best  life  of  the  community.  The  sword,  the  cassock, 
or  the  woolsack  typified  the  real  business  of  men;  the  nec- 
essary commissary  might  demand  the  attention  of  a  few 
who  were  worthy,  but  it  was  an  unfortunate  few. 

Far  be  it  from  the  present  purpose  to  perpetuate  this 
doctrine,  to  teach  that  in  "  these  degenerate  days  "  the 
work  of  feeding  and  clothing  itself  has  degraded  man- 
kind. Man  is  not  falling  into  degradation.  The  higher 
things  of  life  still  remain  as  highly  esteemed  as  ever.  But 
to  their  rank  has  been  elevated,  by  the  slow  fermentation 
of  the  Baconian  philosophy,  the  world  of  tools.  "  Arma 
virumque,"  sang  Virgil.  "  Tools  and  the  man,"  sang 
Carlyle.  Neither  the  honor  of  arms,  nor  priestly  sanc- 
tity, nor  judicial  dignity,  nor  the  magic  of  brush,  chisel, 
or  reed  has  fallen  in  estimation.  But  there  is  rising 
beside  them  a  worldwide  recognition  of  the  fact  that  in 
the  feeding  and  housing  of  the  race  there  lies  as  high  and 
brave  an  opportunity  for  the  formation  of  enduring 
beauty  as  In  any  of  the  other  walks  of  life.  The  world 
has  given  Itself  up  to  the  peaceable  conquest  of  the  world. 
The  bowels  of  the  earth,  the  abysses  of  the  sea,  the  mys- 
terious power  of  sunlight  and  lightning,  the  still  more 
mysterious,  unfathomable  possibilities  of  the  swarm  of 
human  beings  everywhere  about  us, — all  these  must  be 
subjugated  by  studious  humility  and  untiring  service.  To 
their  understanding,  to  their  Intimacy,  their  coordination, 
and,  finally,  their  control,  is  being  given  the  best  life  that 
Mother  Earth  can  produce.  To  produce  and  distribute 
the  material  boons  won  by  such  study,  to  the  myriads  who 


INTRODUCTORY  xv 

have  sprung  from  her  bosom  in  this  summer  of  political 
liberty,  is  the  greatest  and  highest  need  of  the  age.  To  it 
are  devoted  armies  of  loyal  men  and  women  such  as  the 
world  has  never  before  seen,  leaders  worthy  the  command 
of  such  armies,  and  the  moral  support  and  guidance  of 
sages  and  priests  as  near  to  God  as  were  Moses  and  the 
prophets. 

The  age  in  which  we  live  must  go  down  to  history  as 
the  Age  of  Supply  and  Demand.  It  is  the  age  when  the 
millions  demand,  in  the  economic  sense,  as  they  never  did 
before.  Their  demand  is  not  the  fitful,  overwrought, 
short-lived  cry  of  the  famine-stricken  and  the  oppressed 
of  the  past.  Famine  is  always  local  and  always  weak; 
oppression  quickly  either  kills  or  stuns.  It  is  the  demand 
of  the  healthy  and  the  free  which  now  is  heard, — deep- 
breathed,  sustained  and  sturdy, — the  exultant  shout  of 
the  living,  not  the  despairing  shriek  of  the  dying;  and  it 
arouses  out  of  the  latent  an  equally  sturdy  response.  To 
its  aid  comes  such  Supply  of  all  things  worldly  good  as 
has  never  before  been  seen.  The  greatest  business  of 
the  world  is  supply.  Incidentally  we  do  a  little  fighting, 
a  little  legislation,  a  little  administration.  But  the  fight- 
ing is  for  trade,  the  legislation  is  of  commerce,  the  admin- 
istration is  of  industrial  forces.  Still  more  incidentally 
and  fractionally  we  enjoy  a  little  decorative  art,  a  little 
music,  a  bit  of  belles-lettres.  But,  as  a  race,  we  are  not 
in  earnest  about  it.  Our  occidental  civilization  is  as  yet  at 
breakfast  and  the  morning  chores,  so  to  speak,  earning 
leisure  and  disposition  for  the  amenities  of  the  later  hour. 
But  when  this  preliminary  task  is  once  done,  when  the 
modern  world,  fed  with  this  giant  Supply,  shall  have 
learned  to  choose  wisely  between  gluttony  and  asceticism, 
to  the  end  that  its  days  shall  be  filled  with  the  inspiration 
of  natural  life,  when  it  shall  have  really  turned  its  united 


xvi  INTRODUCTORY 

best  energies  to  the  production  of  Beauty  befitting  its 
Strength,  then  will  the  hitherto  unparalleled  schools  of 
classic  art  pale  in  the  light  of  a  sun  whose  mere  dawn  is 
now  beyond  the  scope  of  accurate  imagination. 

In  human  progress  of  some  such  sort,  to  a  goal  more 
brilliant  than  the  imagination  can  depict,  most  educated 
people  believe.  But  the  faith  is  usually  rather  vague  as 
to  immediate  detailed  steps,  as  to  ways  and  means  by 
which  it  may  be  furthered.  Very  often,  indeed,  appears 
in  public  opinion,  even  of  the  better  sort,  a  fundamental 
inconsistency:  the  combination  of  such  an  expressed  faith 
in  that  ultimate  growth,  of  which  the  present  moment 
must  of  course  form  a  part,  coupled  with  a  complete  con- 
temnation  of  all  the  existing  social  forces  which  are 
together  constituting  the  moment's  progress. 

It  is  in  the  hope  of  somewhat  clarifying  both  these 
fields  of  misunderstanding:  the  complexity  of  existing 
forces  whose  intricate  play  constitutes  the  body  politic  as 
we  see  it  at  present,  and  the  future  lines  of  progress  which 
may  be  expected  to  result  from  their  natural  development, 
into  consistency  with  each  other  and  with  those  natural 
longings  which  ever  spring  spontaneously  within  the 
human  heart,  that  the  following  analysis  and  synthesis  has 
been  undertaken  and  is  here  presented. 

To  this  end  it  is  necessary  to  begin  at  the  beginning. 
Indeed,  the  greatest  problem  is  to  find  the  beginning. 
Upon  what  unassailable  foundation  may  we  erect  our 
philosophies  of  modern  economic  life?  Of  the  moral 
fundaments  the  Christian  world  is  sure  and  in  agreement : 
love,  justice,  charity  and  industry  cover  well  and  briefly 
the  ground  for  all  moral  guidance.  But  do  they,  unam- 
plified  and  undefined,  answer  the  questions  of  the  day? 


INTRODUCTORY  xvii 

Here  upon  our  hands  is  the  social  problem:  of  slums, 
palaces,  crime  and  corruption.  Is  it,  can  it  be,  after  so 
many  centuries  of  human  progress,  merely  the  fruit  of 
our  having  also  on  our  hands  and  hearts  too  little  of  love, 
justice,  charity  and  industry,  in  their  abstract  moral  ex- 
pression? Is  it  true  that  the  slums  are  due  to  laziness, 
the  palaces  to  industry,  the  crime  to  hatred  and  the  cor- 
ruption to  innate  disloyalty?  Are  all  of  the  economic 
phenomena  which  we  see  about  us  the  direct  result  of 
moral  promptings  in  the  individual  heart?  Do  all  such 
spontaneous  promptings  find  possible  expression  in  our 
social  conformation?  All  things  being  taken  together,  is 
this  probable,  or  even  possible? 

It  certainly  seems  not.  And  yet,  the  simple  old- 
fashioned  formula  for  the  explanation  of  all  actions :  that 
they  are  prompted  within  the  individual  heart  by  impulses 
which  are  beyond  scrutiny  outside  of  the  psychological 
laboratory,  beyond  explanation  except  by  the  inevitable 
iniquity  of  human  nature  and  beyond  control  except  by 
moral  suasion  and  the  direct  intervention  of  Providence, 
— this  formula  once  abandoned,  what  may  properly  guide 
us?  Where  may  a  Baconian  philosophy  of  social  metab- 
olism, lacking  yet  a  perfected  psychometry,  find  a  rock 
on  which  to  plant  its  feet?  In  a  social  organism,  what  are 
the  fundamentals?     What  things  are  of  most  worth? 

Since  the  days  of  Saint  Paul  the  question  has  been 
asked;  and  never  has  it  needed  answer  more  urgently  than 
now.  With  formula  and  statistics  the  suffering  world  is 
rightly  growing  impatient.  We  prate  of  economic 
science;  yet  have  we  any  such?  The  proof  of  a  science 
is  its  ability  to  predict.  Of  social  phenomena  what 
measure  of  prediction  do  the  schools  offer?  Our 
astronomy  predicts  its  happenings  to  the  fraction  of  a 
second.     Our  engineering  science  will  spend  five  years  of 


xvlil  INTRODUCTORY 

work  and  millions  of  dollars  upon  a  battleship  or  a  tunnel, 
and  predict  to  a  hair  the  degree  of  usefulness  of  the  result. 
Our  meteorological  bureau  ev^en  predicts  the  movements 
of  the  wanton  winds,  days  ahead.  Yet  our  economic 
science  predicts  nothing.  Not  a  war,  not  a  panic,  not  a 
strike,  not  even  a  flurry  upon  'Change  does  it  pretend  to 
predict,  to  the  confidence  of  even  a  minority  of  its  adher- 
ents. Not  a  single  legislative  body  or  policy  is  guided 
by  its  dictum.  Degrees  of  taxation,  amounts  of  penalties, 
etc.,  etc.,  are  decided  according  to  statistical  record,  it  is 
true.  But  not  a  single  broad  law  or  fundamental  prin- 
ciple of  legislative  policy  may  it  lay  claim  to  guide.  Re- 
garding impending  war  or  peace,  free  trade  or  protection, 
expansion  or  contraction  of  the  currency  or  of  territory, 
punitive  repression  or  lenient  encouragement  in  penology, 
and  a  host  of  similar  broad  questions  of  public  policy,  it 
is  either  dumb  or  a  Babel,  so  far  as  any  accuracy  or  effec- 
tiveness is  concerned.  Men  of  the  greatest  natural  in- 
telligence and  the  best  of  scholastic  equipment  differ 
regarding  them  most  widely,  and  with  no  hope  of  ulti- 
mate agreement  except  at  the  cost  of  experiment  upon  a 
national  scale.  Men  of  the  most  sincere  patriotism  seek 
its  guidance  in  public  affairs  of  the  day  only  to  turn  away 
mystified  and  discouraged. 

If  individual  opinion  should  quarrel  with  the  sweeping 
validity  of  such  statements  as  the  foregoing,  yet  it  must 
at  least  admit  their  truth  to  a  degree  as  characterizing  the 
present  social  problem.  The  explanation  of  the  situation 
is  that  economic  science  as  yet  lacks  fundamental  prin- 
ciples. It  is  a  vast  mass  of  undigested  statistics  and  sec- 
ondary, untested  formulse.  To  parallel  such  principles 
as  that  of  the  conservation  of  energy  in  physics,  the  New- 
tonian laws  in  mechanics,  the  Keplerian  laws  in  astronomy 
or  the  Darwinian  law  in  organic  evolution, — principles  so 


INTRODUCTORY  xix 

broad  and  so  firmly  founded  that  their  validity  may  be 
relied  upon  in  novel  contingencies  where  concrete  evidence 
is  entirely  lacking, — it  has  nothing  to  offer.  It  knows 
not  which  is  beginning  and  which  is  end,  which  is  cause 
and  which  Is  effect,  what  is  reality  and  what  is  empty 
form. 

To  replace  this  chaos  with  a  complete  and  adequate 
social  philosophy  may  not  be  the  legitimate  aim  of  any 
one  book  or  man.  But  to  start  right  in  the  search  for  it, 
to  begin  at  the  beginning  and  to  pick  out  the  fundamen- 
tals,— to  at  least  pick  out  one  of  them, — may  properly 
and  profitably  be  undertaken  now.  If  it  be  done  conscien- 
tiously it  cannot  but  lead  us  upwards,  into  a  better  under- 
standing of  that  organic  whole  which  we  call  Our  Coun- 
try: which  is  not  the  earth  mapped  out  beneath  our  feet, 
nor  the  skies  above,  nor  even  the  mere  aggregation  of 
individual  Smiths  and  Joneses  which  walk  between;  but 
which  is  that  method  and  form  of  union  of  all  of  these 
features  into  a  single  organism,  by  cementing  institutions 
and  laws  of  which  we  may  be  justly  proud  or  must  be 
justly  ashamed,  into  a  whole  of  which  we  are  each  of  us  a 
part  and  by  which,  whether  we  will  or  not,  whether  we  be 
patriot  or  traitor,  millionaire  or  pauper,  we  live  and  we 
die.     This  is  our  country. 

To  this  great  Absorbent,  Mold,  and  Expression  of  us 
all,  what  things  are  of  the  most  worth? 


PART    I 

The  Economic  Cost 


VALUE 

IT  may  be  that  either  nature  or  God  has  in  mind  some 
final  purpose  toward  which  the  existence  of  the 
human  race  constitutes  an  essential  step.  Since  the 
dawn  of  human  history  man  has  been  prone  to  believe  so. 
The  struggles  and  the  pain  of  life  put  upon  him  a  pressure 
which  he  can  hardly  bear.  His  strength  fails  him;  his 
courage  falters;  he  needs  help  and  consolation  from  with- 
out. He  finds  it  in  hope, — the  hope  of  a  reward  hereafter 
for  the  fruitless  endeavor  here  below;  or,  if  the  faith  in  a 
life  after  death  is  wanting,  there  arises  at  least  a  faith 
that  the  brief  and  joyless  period  of  work  allotted  to  us  now 
will  bring  permanent  joy  to  some  ultimate  development  of 
life  other  than  ours  which  shall  have  attained  a  permanent 
state  of  happy  existence.  All  forms  of  prayer  consist,  in 
one  way  or  another,  of  a  faith  that  we  here  below  con- 
stitute a  part  of  an  Infinite  Enterprise  to  which  our  en- 
deavors contribute  and  for  which,  therefore,  they  were 
undertaken.  The  faith  Is  as  old  and  as  natural  as  life 
itself. 

And  yet,  when  observation  is  made  of  the  details  of  the 
way  in  which  nature  conducts  her  daily  processes  of  life, 
there  is  visible  no  evidence  of  any  such  Ultimate  Purpose. 
There  appears  only  a  striving  after  one  concrete  thing: 
Perpetuation.  Man's  instinctive  faith  may  be  true.  His 
spontaneous  moral  promptings  may  be  broader  in  their 
perceptions  and  conclusions  than  are  his  intellectual  fac- 


4  THE    COST   OF   COMPETITION 

ultles.  There  need  be  no  denial  of  the  existence  of  the 
ulterior  goal.  But  if  it  does  exist,  it  exists  in  such  a  way 
that  a  whole  world  of  life  is  but  one  unit  in  its  structure. 
Nature's  only  visible  purpose  is  to  multiply  and  to 
strengthen  life.  This  life  may  mean  a  growth  into  ulti- 
mate permanent  ascendency  over  all  evil  and  suffering;  It 
may  mean  hopeless  struggle  against  degenerative  forces 
until  their  Irresistible  march  ends  in  death  and  nothing- 
ness. For  the  present  it  matters  not.  Taking  the  world 
as  we  see  It,  going  only  so  deep  as  we  can  fathom  with 
certainty,  leaving  all  hopes  and  faiths  to  religion,  there 
stands  out  but  one  fundamental  fact  as  the  base  for  all 
study  of  human  life,  either  as  a  biological  phenomenon 
or  as  the  necessary  starting  point  for  all  sociological  dis- 
cussion : 


The  Object  of  All  Life  is  Life. 

To  the  one  other  fundamental  factor  plainly  needed  to 
fill  out  the  premises — the  factor  of  Growth — we  are  forced 
to  accord  a  secondary  position,  to  place  it  in  the  conclusions, 
so  far  as  Immediate  argument  Is  concerned,  rather  than  in 
the  premises.  The  primary  force  which  promotes  it  we 
have  as  yet  been  unable  to  define.  The  goal  toward  which 
It  Is  driving  us  Is  as  yet  announced  only  in  the  creeds  of 
religious  faith,  and  there  often  unformulated.  But  what- 
ever may  prove  to  be  the  truth  as  to  either,  certain  it  is 
that  they  remain  as  corollaries  to  the  first  proposition. 
Growth  cannot  take  place  unless  perpetuation  of  the  pres- 
ent be  first  attained.  Progress  Implies  primarily  that 
provision  has  first  been  made  to  forefend  retreat.  Re- 
production of  the  existing,  each  after  its  own  kind.  Is  the 


VALUE  5 

first  office  of  life,  the  first  law  of  God,   the  first  great 
human  fact. 

Also  growth  in  numbers  necessarily  precedes,  as  a  basic 
foundation  for,  growth  in  kind  or  quality. 

The  truth  of  these  statements  is  most  palpable  in  the 
lower  forms  of  life.  Here  it  is  incontrovertible.  It  is  a 
prime  characteristic  of  all  the  lower  orders  of  existence 
that  there  is  very  plainly  no  other  object  in  view  except 
reproduction.  Every  step  in  the  development  of  insect 
or  crustacean  is  planned  to  this  end;  and  while  it  can  be 
said  that  there  are  other  imaginable  paths  of  approach  to 
the  final  result  than  those  actually  followed,  that  many  of 
the  stages  of  development  of  the  individual  appear  to  be 
irrelevant  and  to  exist  for  other  purposes,  such  as  food- 
supply  to  other  forms  of  life  or  for  the  sake  of  mere 
beauty,  yet  it  can  be  replied  with  equal  force  that  this  too, 
in  the  few  cases  which  have  not  yet  been  connected  with 
reproduction,  is  life  carried  on  for  the  sake  of  life.  The 
consummate  fact,  in  most  of  these  lower  levels,  is  that  the 
process  of  procreation  ends  the  individual  life.  .  If  nature 
has  any  use  for  the  individual  insect  other  than  the  pro- 
duction of  more  insects,  those  duties  are  not  performed 
after  procreation  is  accomplished.  That  act  ends  activity. 
All  duties  performed  before  that  culmination,  on  the  other 
hand,  must  be  regarded  as  accessory  to  what  comes  after. 

For  instance,  the  storage  of  pollen  by  bees  is  very  plainly 
an  act  performed  for  the  sustenance  of  offspring.  But 
nearly  all  bees  store  much  more  pollen  than  the  young 
bees  can  consume.  Viewed  as  a  provision  against  loss  by 
robbery,  storm,  etc.,  this  surplus  stands  purely  as  a  safe- 
guard against  possible  failure  of  the  next  generation  of 
bees,  under  average  conditions  of  interference  from  with- 
out.    But  viewed  in  its  broadest  sense,  this  surplus  is  a 


6  THE    COST   OF   COMPETITION 

provision  for  the  life,  if  not  of  bees,  then  of  bears 
and  men.  Even  at  so  low  an  order  of  life  as  the  insect 
is  seen  herein  the  elementary  effort  of  one  form  of  life  to 
provide  for  another.  The  fact  that  it  is  done  uncon- 
sciously and  unintentionally  does  not  affect  the  result. 

As  the  development  of  life  in  the  higher  and  higher 
forms  is  observed,  it  becomes  plain  that  this  parallel  sur- 
plus provision  for  other  life  than  the  immediate  off- 
spring becomes  more  and  more  prominent.  In  the  first 
place,  the  care  for  the  direct  offspring  has  become  more 
complex.  Gestation  has  succeeded  egg-laying.  Infancy 
under  care  and  tutelage  has  replaced  larval  development. 
The  amount  of  care  bestowed  upon  the  young  has  tremen- 
dously increased,  and  still  grows  with  every  advance  in 
height  and  complexity  of  existence.  But  the  proportion 
of  life-effort  preceding  completed  reproduction  of  the 
adult  offspring  has  markedly  decreased.  In  the  insect 
all  of  life  commonly  precedes  the  mere  appearance  of  the 
succeeding  generation.  There  is  no  lap  of  generation 
over  generation.  In  man  not  more  than  a  third  of  life  is 
past  before  reproduction  is  undertaken,  and  not  more  than 
two-thirds  before  it  is  completed.  The  generations  lap 
over  each  other  until  sometimes  as  many  as  three  succeed- 
ing adults  exist  at  the  same  time,  with  the  fourth  genera- 
tion  in   well-developed   infancy. 

The  remainder  of  the  life-effort  of  these  higher  forms 
of  life,  after  reproduction  is  cared  for,  very  plainly  goes 
to  other  ends  than  the  care  of  immediate  offspring.  Even 
in  the  brutes  this  is  apparent,  in  embryo.  Some  effort  is 
spent  in  organization  and  in  the  costly  struggle  by  which 
leadership  is  determined.  Food-supplies  for  other  ani- 
mals are  accumulated,  as  by  the  deer  for  the  wolf;  vege- 
table growth  is  fostered  or  regulated,  as  by  the  earthworm 
or  the  browsing  herbivora  or  the  pollen-carrying  honey- 


VALUE  7 

gatherers;  servitude  is  even  accomplished,  as  in  the  aphides 
to  the  ants.  In  the  last  development  of  animal  life  it 
becomes  domesticated  and  subservient  to  man.  As  beast 
of  burden  and  as  provision  of  food  and  clothing,  the  beasts 
alone  made  man  first  possible. 

In  human  life  itself  this  parallel  provision  for  other 
forms  of  life  than  that  of  the  immediate  offspring  reaches 
Its  highest  and  widest  development.  Whether  a  man  un- 
selfishly wills  it  or  not,  all  of  his  life-effort,  after  his  chil- 
dren are  cared  for,  goes  to  support  others.  They  will 
fatten  upon  him  and  upon  his  work,  though  he  be  a  miser 
or  a  murderer.  He  contributes  to  industry,  to  commerce, 
to  politics,  or  to  art  all  his  life  long;  or  if  he  succeeds  in 
failing  to  contribute  even  a  mite  to  these,  medical  science 
is  at  the  last  the  richer  for  his  life,  his  pain  and  his  death. 
If  he  even  be  no  more  than  one  unit  in  a  column  of 
statistics,  or  a  mere  pestilential  corpse  whose  presence 
forces  mankind  to  consider  pestilence  for  a  moment,  what 
little  he  accumulated  or  inherited  of  life  has  gone  to  enrich 
or  to  fortify  the  future  race.  Nature  wastes  nothing.  In 
no  department  of  nature  Is  this  so  true  as  in  human  life. 

All  civilization  is  made  up  of  this  fact.  Civilization, 
indeed.  Is  nothing  more  than  this  fact  become  a  conscious 
one.  The  great  majority  of  men  recognize  and  strive  to 
meet  their  duty  to  others.  Military  patriotism  is  ele- 
mental. The  first  Society  arose  upon  its  back.  Man 
lived  and  died  for  his  country  almost  before  he  had  a 
country.  Later  came  civic  patriotism,  art,  science  and  in- 
vention. With  their  spread  have  come  peace,  freedom 
and  enlightenment.  With  them,  too,  have  come  hospi- 
tals, asylums,  refuges  and  reforms.  Not  all  the  evil  love 
of  all  the  good  gold  In  the  world  has  been  able  to  lure 
man  from  his  first  devotion  to  the  conservation  of  life; 
he  has  reserved  only  a  secondary,  minor  homage  for  Indus- 


8  THE    COST   OF   COMPETITION 

try  and  commerce.  At  every  turn  of  civilized  existence 
life  is  held  sacred,  inviolate  and  invaluable.  No  expense 
Is  held  too  great  to  warrant  the  extension  of  care  to  the 
worst  mutilated  body,  of  justice  to  the  meanest  criminal. 
The  highest  devotion  known  to  mankind  is  daily  visible 
in  medicine  and  in  nursing;  the  broadest  patriotism  Is  in- 
corporated in  our  common  judicial  system.  Of  all  the 
institutions  of  man,  the  gallows  and  the  slums  alone  stand 
In  contradiction  of  this  universal  sacredness  of  life. 

Life,  then,  is  sacred.  It  is  the  sole  object  of  all  life, 
of  all  effort,  of  all  inspiration.  For  its  furtherance,  and 
for  that  alone,  exist  not  only  the  family,  the  school  and 
the  factory,  but  all  science,  all  art  and  all  religion.  To 
discuss  Its  "  worth,"  even  to  raise  the  question :  "  Is  life 
worth  living?  "  with  hope  of  profitable  answer,  with  other 
object  than  merely  to  kill  time, — life  for  the  moment 
apparently  being  worth  nothing  better, — Is  a  mere  lack  of 
life.  Is  partial  death  or  temporary  insanity.  For  a  men- 
suration of  Its  value,  in  any  external  unit,  is  as  Impossible, 
as  incomprehensible  to  the  human  intellect,  as  is  the  defini- 
tion of  space  or  time.     They  are  Indefinables  all. 

Nevertheless,  man  occupies  and  makes  use  of  his  own 
little  atoms  among  the  indefinables,  or  even  among  the 
infinities.  He  employs  space  and  time,  and  life  Itself, 
for  his  purposes.  He  must  have  Ideas  of  quantity  In  con- 
nection with  them  all.  He  must  have  units  of  measure- 
ment. But  he  needs  to  use  rational,  comparative  units: 
of  time  for  measuring  tim'e,  of  space  for  measuring  space, 
of  life  for  measuring  life. 

This  measurement  erf  Life  man  actually  essays.  As  the 
flotsam  of  life  is  tossed  before  him  for  consideration,  as 
love,  riches  or  Institutions,  as  knowledge,  opportunity  or 
inspiration,  are  held  up  for  his  comparative  estimation,  the 


VALUE  9 

decision,  speaking  broadly,  always  finally  turns  upon  the 
question:  "  How  much  of  human  life  will  it  support  or 
elevate?"  Temporarily  or  locally  fancy  or  ignorance 
may  warp  the  judgment,  and  this  rightful  arbiter  of  the 
issue  be  forgotten;  but  sooner  or  later  nature  reduces  the 
question  to  its  lowest  terms:  "The  greatest  good  of  the 
greatest  number."  That  which  brings  the  opportunity  of 
life  to  the  greatest  number,  or  in  the  greatest  purity,  or 
in  the  greatest  complexity  of  composition,  inevitably  sur- 
vives. The  fruitless  fancy,  the  vain  ambition,  the  selfish 
greed,  the  malevolent  craze,  succumbs.  Art  may  flourish, 
empire  may  widen,  knowledge  may  take  root  and  grow, 
culture  and  refinement  may  be  of  the  most  extreme,  aristoc- 
racy may  flaunt  its  heraldic  emblems  and  prune  its  ancient 
genealogical  trees;  yet  if  the  solid  promise  of  unlimited 
opportunity  for  future  billions  be  not  incorporated  therein 
nature  sets  upon  it  her  stamp  of  disapproval.  It  withers 
and  dies,  is  buried  and  lost.  In  its  place  sprouts  the  seed- 
ling of  a  new  life,  vigorous  and  unlovely,  but  true  to  its 
duty  toward  the  unborn  hosts.  It  thrives  and  prospers. 
Feeding  upo-n  the  carcass  of  the  lost,  it  attains  the  prom- 
ise of  which  the  other  failed.  Life  is  multiplied  and 
widened  and  elevated.  Life,  the  object  of  life,  has  been 
accomplished. 

This  estimation  of  life  in  terms  of  life  is  a  true  valu- 
ation. It  is  the  only  possible  true  one.  In  the  attempt 
to  gain  any  comprehension  of  the  idea  of  "  worth  "  or 
"  value  "  of  life,  it  alone  brings  satisfaction.  It  alone  is 
in  no  danger  of  the  reduct'io  ad  absurdam,  as  of  an  at- 
tempted equation  between  minutes  and  Inches. 

Yet  this  satisfaction  referred  to  must  keep  plainly  in 
view  the  narrow  limitation  of  the  valuation.  It  is  purely  a 
comparative    one.      It    measures    life    only    In    terms    of 


lo  THE    COST    OF   COMPETITION 

life.  For  instance,  a  clam  values  mud  and  tides  and  art 
and  music  solely  as  they  are  conducive  to  clam  life.  It 
would  be  a  very  unnatural,  crazy  or  morbid  clam  which 
did  not.  But  a  man  must  value  mud  and  tides  and  music 
and  art  solely  as  they  are  conducive  to  human  life.  There- 
fore, the  two  valuations  must  differ  hopelessly. 

Further,  there  must  be  great  difference  in  the  value  of 
a  thing  for  human  life  between  one  time  and  another. 
The  land,  the  utensil,  the  institution,  the  occupation  which 
at  one  time  may  have  had  a  very  high  value  in  the  support 
of  human  life,  at  another  must  have  a  very  different  one. 
It  may  have  afterwards  lost  all  of  its  potentialities  for 
succoring  life.  It  may  have  become  even  destructive  of 
life,  and  therefore  come  to  possess  a  negative  value:  a 
thing  to  be  cut  out  and  destroyed,  even  at  cost.  Plainly, 
all  hope  of  permanency  of  value  must  be  abandoned. 

Nevertheless,  full  emphasis  must  be  laid  upon  the  fact 
that  the  value  exists.  It  is  a  natural,  concrete  fact.  Any 
imaginable  Thing  possesses  a  certain  latent  ability  to 
foster  human  life.  This  ability  may  be  r&cognized  and 
employed;  it  may  be  ignored  and  wasted.  If  the  ignor- 
ance and  waste  apply  to  the  entire  race,  it  must  be  re- 
garded as  inevitable  at  that  stage  of  human  growth,  and 
that  the  thing  in  question  possesses  no  immediate  poten- 
tiality for  that  particular  sort  of  life.  But  if  the  waste 
is  only  on  the  part  of  an  individual,  or  of  a  fraction  of  the 
race,  there  then  arises  a  question  concerning  the  valuation 
of  the  thing  under  discussion  by  the  various  individuals  con- 
cerned, and  this  valuation  is  a  thing  quite  apart  from  the 
natural  value  of  the  object. 

For  instance,  the  petroleum-deposits  of  North  America 
were  known  to  the  aborigines,  but  were  employed  not  at 
all,  or  only  as  medicinal  agents.  For  the  support  of 
Indian  life  petroleum  possessed  practically  no  value,  while 


VALUE  II 

bison-meat  possessed  much.  Now  that  the  country  Is 
populated  by  civiHzed  whites  the  petroleum  possesses 
great  value  and  the  bison  none.  Yet  to  the  few  remain- 
ing Indians  the  petroleum  is  still  almost  valueless..  Orig- 
inally, the"  value  of  the  petroleum  was  nearly  zero  and 
the  savage's  valuation  of  it  was  correct.  To-day  the 
value  of  petroleum  is  very  great  and  the  Indian's  valuation 
of  it,  which  has  remained  substantially  unchanged,  is  quite 
erroneous. 

In  the  following  pages,  therefore,  the  following  defini- 
tions and  distinctions  will  be  applied  to  the  terms  "  value  " 
and  "  valuation." 

Value  is  the  potentiality  of  a  thing  for  the  support  of 
human  life  and  growth.  In  the  measurement  of  this 
potentiality  the  average  existing  stage  of  development  of 
the  race,  and  hence  its  possibilities  for  utilizing  the  thing, 
must  be  considered;  but  this  point  once  defined, — and  it 
may  or  may  not  be  included  as  a  natural  fact  of  environ- 
ment,— it  may  be  asserted  that  value  is  a  natural  attribute 
of  a  thing,  inalienable  and  unalterable  by  human  will  ex- 
cept as  either  the  thing  itself  or  the  knowledge  of  the 
entire  community  regarding  its  mode  of  consumption  is 
altered  as  a  means  thereto. 

In  this  sense,  value  is  nearly  always  made  up  of  two 
factors :  the  original  and  the  contributed.  The  original 
consists  of  its  chemical  and  physical  properties,  its  pleni- 
tude of  distribution,  its  geographical  or  topographical 
accessibility,  etc.  The  contributed  is  always  capable  of 
inclusion  under  the  term  scientific  or  technical  knowledge. 
Thus,  nearly  all  of  the  substances  which  are  now  relied 
upon  as  the  raw  material  of  modern  industry  were  known 
to  man  before  their  possibilities  were  appreciated  and  util- 
ized.     Coal  was  known  and  used  before  the  steam-engine 


12  THE    COST   OF   COMPETITION 

gave  to  it  its  present  fundamental  importance  in  the  sus- 
tenance of  our  civilization.  Part  of  its  value  lies  in  the 
fact  of  its  being  coal;  part  has  been  added  by  man  in  the 
invention  of  the  steam-engine.  Its  thus  compounded 
value  has  been  further  supplemented  by  the  invention  of 
coal-gas,  and  again  by  the  appearance  of  the  gas-engine, 
of  aniline  dyes  and  of  a  thousand  other  additions  to  the 
technical  attainments  in  industry  which  rest  primarily  upon 
our  coal-supplies.  There  is  scarcely  a  step  in  advance  in 
modern  methods  of  production,  in  any  line  of  invention, 
which  does  not  enhance  the  value  of  coal. 

If  it  be  preferred,  the  distinction  may  be  kept  in  mind 
that  only  the  original  value  of  the  coal  should  be  assigned 
to  it,  the  increments  due  to  steam-engine,  coal-gas,  etc., 
being  conserved  to  the  credit  of  those  implements  them- 
selves. Neither  plan  will  be  found  to  be  ultimately  cor- 
rect; the  implements  would  be  entirely  worthless  without 
any  coal;  the  coal  would  be  almost  worthless  without  the 
implements.  But  the  distinction  between  the  two  plans 
is  quite  irrelevant  to  our  further  argument  and  is  men- 
tioned here  merely  to  prevent  misunderstanding  and  to 
allay  fear  that  it  might  have  been  overlooked  in  the 
analysis.  The  point  is,  and  it  will  be  made  clearer  and 
more  emphatic  in  later  elaborations,  that  man,  by  his  skill 
and  industry,  can  affect  existing  values  or  produce  new 
values;  but  it  is  also  to  be  emphasized  that  he  does  it 
solely  by  either  discovery  or  invention,  by  the  overcoming 
of  purely  natural  obstacles,  to  the  increase  of  Human 
Knowledge. 

Because  it  is  so  widely  accepted  as  axiomatic,  by  the 
average  man  of  affairs  of  the  day,  however,  that  the  ideas 
of  value  and  of  price  are  identical,  especial  warning  is 
also  to  be  inserted  here  to  the  effect  that  the  understand- 
ing of  the  reader  should  be  kept  neutral  as  to  the  defini- 


VALUE  13 

tlon  of  price  until  the  latter  is  reached  in  the  analysis. 
So  far  is  it  from  the  truth  that  value  and  price  are  synony- 
mous that  it  may  be  stated,  as  a  general  coincidence,  that 
nearly  all  of  the  factors  just  stated  as  increasingly  contrib- 
utory to  the  value  of  a  commodity  actually  result  in  a 
decrease  in  its  price.  The  invention  of  the  steam-engine, 
for  instance,  which  has  added  enormously  to  the  value  of 
coal,  has  very  markedly  decreased  the  price  of  coal. 
There  is  no  fixed  inverse  relation  between  the  two;  but,  on 
the  other  hand,  there  is  no  direct  one  either. 

Valuation,  quite  in  contrast  with  Value,  is  the  human 
estimation  of  the  value  of  a  thing,  on  the  part  of  an  in- 
dividual, of  a  fraction  of  the  community  or  of  the  entire 
race.  It  must  always  be  regarded  as  a  human  and  faulty 
approximation  to  the  natural  reality — Value.  It  is  in- 
tensity of  desire,  although  not  always  visibly  expressed, 
in  the  face  of  proposed  exchange.  It  is  a  function  of  the 
mental  and  psychic  make-up  of  the  individuals  concerned, 
and  differs  in  each.  In  most  of  our  use  of  the  term  later 
in  these  pages  it  will  be  understood  to  signify  the  average 
valuation  amongst  a  certain  number  or  class  of  individ- 
uals. The  context  will  reveal  in  each  case  which  is 
meant:  individual  or  average  valuation. 

Valuation  is  easily  alterable  by  man,  without  any  altera- 
tion either  of  the  thing  itself  or  of  the  available  fund  of 
the  world's  knowledge  regarding  its  consumption,  through 
the  medium  of  fashion,  education,  persuasion,  duress, 
emergency,  etc.  All  that  is  needed,  in  order  to  affect 
valuation,  is  to  influence  the  mental  attitude  of  the 
individual,  or  of  a  number  of  individuals,  toward  the 
thing  in  question. 

Thus,  large  diamonds  (to  exclude  the  unattractive  little 
ones  utilized  in  the  arts)  possess  very  little  real  value.    It 


14  THE    COST   OF   COMPETITION 

is  doubtful  if  they  in  any  way  aid  in  the  support  of  life  or 
growth,  even  in  a  minor  degree.^  But  their  valuation  by 
certain  individuals  and  classes  is  very  high.  Pure  water 
and  fresh  air,  on  the  other  hand,  are  of  the  very  highest 
value;  yet  until  recently  they  had  a  very  low  valuation,  as 
compared  with  diamonds.  Even  to-day  impure  air  and 
water  are  accepted  without  complaint  by  ladies  who  would 
feel  it  a  hardship  to  be  compelled  to  appear  in  evening 
dress  without  their  diamonds. 

Diamonds  will  serve  as  an  illustration,  too,  of  how  the 
valuation  of  a  thing  depends  upon  personal  forces  quite 
differently  from  value.  The  value  of  diamonds  depends 
upon  our  knowledge  as  to  their  usefulness  in  the  arts,  at 
present  confined  to  minor  grinding  and  drilling  processes. 
Future  discovery  may  unearth  much  wider  fields  of  pro- 
ductive usefulness  for  the  diamond  than  these,  and  so 
enhance  its  value.  In  this  sense,  and  this  only,  its  value 
is  variable  with  time  and  effort.  But  its  valuation  is  arti- 
ficially variable  in  many  other  ways.  The  present  high 
valuation  of  the  diamond  does  not  depend  upon  ignorance 
of  the  fact  that  it  is  good  only  for  grinding.  Many 
people  who  know  that  fact,  mentally  if  not  spiritually, 
still  prize  decorative  diamonds  highly.  It  depends  upon 
personal  vanity,  in  the  first  place,  upon  fashion  In  the 
second,  and  upon  the  possibility  of  acquiring  wealth  by 
means  of  mere  personal  attractiveness  in  the  third. 
Alteration  in  either  may  take  place  at  any  time,  in  an 
individual  or  in  an  entire  community,  by  artificial  influ- 
ence, quite  independently  of  any  alteration  in  human 
knowledge  as  to  the  productive  usefulness  of  diamonds. 

1  This  does  not  necessarily  imply  that  decorative  art,  even  as  applied  to 
personal  adornment,  is  useless  for  maintaining  life,  in  quality  as  well  as  in 
quantity.  It  merely  raises  the  question,  or  assumes  it  negatively,  for  the 
purposes  of  illustration,  as  to  whether  or  not  the  diamond  is  really  decora- 
tive, as  usually  worn, 


VALUE  15 

There  is  no  fixed  or  natural  relation  between  the  value 
and  the  valuation  of  a  thing.  With  the  great  majority 
of  natural  objects  now  undergoing  study  the  full  value  is 
not  yet  perceived;  valuation  is  far  below  latent  value. 
The  efficiency  of  valuation,  so  to  speak,  is  low.  It  may, 
indeed,  in  this  sense,  be  regarded  as  necessarily  less  than 
unity.  But  with  many  other  objects,  such  as  diamonds, 
alcoholic  drinks,  firearms  and  hereditary  titles,  the  present 
valuation  far  exceeds  the  value.  With  these  the  explana- 
tion lies  in  the  very  low  value  of  the  things  themselves  and 
in  the  irrationality  of  a  fashion  which  keeps  them  in 
favor.  But,  as  will  be  developed  later,  quite  other  forces 
than  these  may  lead  to  an  excess  of  valuation  over  value. 


II 

PRODUCTION  AND  CONSUMPTION 

IT  has  been  observed  that  the  object  of  all  life  and 
activity  is  the  support  and  furtherance  of  life.  Com- 
plete discussion  of  the  ways  in  which  this  most  com- 
plex process  is  carried  out  in  human  affairs  would  carry 
the  argument  into  every  detail  of  the  arts  and  crafts,  into 
manufacture,  commerce,  legislation,  literature,  science  and 
decorative  art.  To  properly  limit  and  direct  the  present 
inquiry  within  profitable  bounds  it  is  sufficient  to  define  it 
as  concerning  primarily  the  relations  between  the  men  and 
the  things  concerned  only  in  that  sort  of  life-support  where 
the  Value  is  embodied  in  an  appreciable,  material  or  mer- 
chantable thing. 

The  process  of  the  expenditure  of  human  effort  in  the 
creation  of  Value  ready  for  the  support  of  further  life  is 
known  as  production.  The  process  of  the  expenditure  of 
Value  in  the  production  of  further  supplies  of  human 
energy  is  known  as  consumption.  The  two  together,  each 
balancing  the  other,  constitute  that  energetic  cycle  which  is 
known  as  economic  social  life. 

The  form  in  which  these  processes  take  place  to-day, 
however,  in  spite  of  their  simplicity  in  principle,  is  far  too 
complex  to  admit  of  their  being  passed  by  with  the  brief 
definition  just  accorded  to  them.  An  understanding  of 
their  exact  natures  and  limits  will  require  considerable  dis- 
cussion; and  in  this  discussion,  since  all  of  these  matters 
have  long  been  under  comment  in  a  loose  and  popular 
fashion,  many  words  familiar  to  every  reader  will  have 
to  be  redefined.     Nor  will  the   definitions,   albeit  exact, 

16 


PRODUCTION   AND    CONSUMPTION  17 

which  have  already  been  assigned  to  these  words  by  pre- 
vious economic  writers  always  be  found  to  be  satisfactory 
for  our  present  purpose.  The  definitions  here  chosen  for 
them  may  seem  to  be  arbitrary;  but  even  so,  they  must  be 
carefully  adhered  to  if  the  naturally  discouraging  intri- 
cacy of  such  a  topic  as  economics  is  not  to  be  aggravated 
by  the  additional  artificial  difficulty  of  a  misunderstanding 
of  meaning. 

At  the  start,  these  definitions  will  be  listed  somewhat 
succinctly,  their  significance  in  combination  being  brought 
out  more  gradually  only  by  further  development.  When 
all  is  finished  it  will  be  found  that  the  limitation  just 
assigned  to  the  argument,  viz. :  that  it  is  to  concern  only 
the  production  and  consumption  of  material,  merchantable 
forms  of  Value,  is  a  meaningless  one.  It  will  appear  that 
the  economic  phenomena,  the  principles  of  social  action 
and  their  biological  reaction  upon  the  individual  life  which 
have  been  developed  in  connection  with  material  commod- 
ities hold  just  as  true  when  the  activity  concerns  the  im- 
material, non-merchantable  forms  of  Value  germane  to 
the  fields  of  science,  education,  legislation  and  art,  includ- 
ing even  religious  Inspiration.  Indeed,  it  is  one  of  the 
reasons  why  economic  science  stands  to-day  as  so  puerile 
and  ineffective  that  it  has  ever  been  emasculated  at  the 
outset  by  the  imposition  of  this  unnecessary  limitation. 
Nevertheless,  since  the  material  forms  of  Value  are  the 
more  tangible,  and  so  the  better  for  the  purposes  of  illus- 
tration, and  because  they  employ  the  greater  portion  of 
the  nation's  activity  at  present,  the  traditional  limitation 
will  be  retained,  in  opening  the  argument  at  least. 

Land.  The  first  prerequisite  for  the  creation  of  Value, 
for  the  support  of  human  life,  is  access  to  the  natural 
stores  of  true  raw  material.  To  these  stores,  whether 
found   in   the  field,   the   forest,   the  mine,   the   rivers   or 


i8  THE    COST    OF    COMPETITION 

the  sea,  is  given,  in  economic  parlance,  the  name  of 
"  land."  Whichever  of  these  it  may  be,  the  word  is  ever 
to  be  understood  as  referring  only  to  the  natural  locality, 
or  site,  and  never  to  any  artificial  aids  to  the  development 
of  Its  resources  which  may  have  been  added  to  it  by  human 
labor. 

The  more  complete  definition  of  the  term  land,  together 
with  a  discussion  of  the  nature  of  rent,  will  be  found  in 
Chapter  VII.  For  the  present  it  is  sufficient  to  point  out 
that  the  essential  importance  of  land  as  the  first  means 
to  the  support  of  human  life  has  led  to  its  being,  since 
history  began,  the  prime  object  of  contention  between 
man  and  man.  Not  even  religion  or  love,  the  two  great- 
est epics  of  the  race,  have  been  able  to  lay  claim  to  so 
great  an  expenditure  of  human  life  and  strength,  or  have 
been  responsible  for  so  great  a  fund  of  human  cruelty 
and  suffering,  as  has  the  struggle  for  access  to  and  control 
of  the  most  favorable  portions  of  nature's  bounty  in  the 
form  of  land. 

Tools.  With  primitive  man  the  methods  of  the  pro- 
duction of  wealth  were  of  the  simplest  sort.  Vegetable 
food  was  gathered  and  prey  captured  by  the  diligent  use 
of  the  naked  hands.  The  first  departure  from  this  primi- 
tive simplicity  lay  in  the  invention  and  use  of  tools. 
Decided  advantage  was  found  in  the  use  of  a  cudgel  to 
emphasize  the  force  of  a  blow,  or  of  sharp-edged  shells 
to  aid  in  cutting  and  tearing.  Herewith  arises  the  first 
distinction  between  the  different  sorts  of  things  external 
to  man,  in  his  efforts  at  the  production  of  wealth,  between 
raw  material  and  capital. 

Raw  Material  Is  the  material  substance  which  is  pre- 
sssential  to  and  which  is  passed  through  the  hands  of 
labor  in  the  latter's  efforts  at  its  transformation  into  some- 


PRODUCTION    AND    CONSUMPTION  19 

thing  of  greater  value  for  the  support  of  life.  In  the 
most  primitive  industry  it  is  difficult  to  distinguish 
between  raw  material  and  land.  In  lumbering,  for  in- 
stance, the  forest-trees,  grown  without  cultivation,  stand 
as  a  purely  natural  resource;  and  in  selling  timber-lands 
the  character  of  the  trees  standing  thereon  is  usually  much 
more  of  a  consideration  than  is  site  or  soil.  When  the  hus- 
bandry applies  to  a  vegetable  form  of  wealth  one  degree 
more  complex,  as  in  the  harvesting  of  grain,  for  instance, 
where  the  growth  has  had  to  be  fostered  by  cultivation, 
it  is  only  the  soil  itself  which  is  the  near  approach  to  raw 
material;  the  grain  itself  must  be  regarded  as  the  fruit  of 
labor  expended  in  cultivation. 

In  modern  industry  this  complexity  has  grown  from  an 
incidental  into  an  all-important  feature.  In  considering 
any  fractional  portion  of  the  labor  of  the  country,  raw 
material  no  longer  means  what  it  did  when  man  turned 
universally  and  without  restraint  to  primitive  nature,  to 
the  primeval  forest  or  the  uncultivated  plain,  for  supplies. 
Now  almost  all  raw  material,  as  the  term  applies  to  a 
single  factory,  or  even  to  an  entire  industry,  means  the 
product  of  previous  labor,  placed  in  the  hands  in  ques- 
tion for  the  addition  to  it  of  still  further  increment  in 
value.  Such  raw  material  is  merely  the  result  of  labor 
which  has  been  exerted  at  some  previous  time,  crystallized 
now  into  inanimate  embodiment  and  capable  of  trans- 
portation and  exchange. 

It  is  the  primary  purpose  of  labor,  in  its  handling  of 
raw  material,  to  thus  treat  as  much  of  it  as  possible,  with 
as  little  loss  in  quantity  and  as  great  a  gain  in  value  as 
possible.  The  final  rejection  of  the  finished  article  to  or 
toward  the  consumer  is  as  complete  as  possible.  Indeed, 
the  labor  cannot  be  considered  as  being  productive  labor 
at  all,  and  therefore  to  be  included  in  economic  discussion, 


20  THE    COST    OF    COMPETITION 

unless  it  does  increase  the  value  of  the  raw  material  and 
unless  it  does  reject  all  of  this  increased  value  toward  the 
consumer.  In  both  these  respects  will  be  found  the  char- 
acteristics of  raw  material  which  distinguish  it  from  the 
tools  or  capital  also  employed  by  the  labor  which  treats 
it,  viz. :  that  the  capital  is  never  altered  in  value  and  is 
not  rejected  toward  the  consumer,  but  is  retained  intact 
in  the  users'  hands. 

It  is  to  be  noted  that  there  are  some  commodities  con- 
sumed by  factories,  such  as  coal,  oil,  etc.,  commonly  known 
as  "  current  supplies,"  which  must  be  included  as  properly 
constituting  raw  material,  although  they  disappear  dur- 
ing the  progress  of  the  work  and  do  not  reappear  as  a 
part,  in  a  visible,  concrete  sense,  at  least,  of  the  finished 
product.  Invisibly,  however,  they  are  incorporated  into 
the  work  and  into  the  result. 

Capital  is  the  assemblage  of  tools,  large  and  small, 
the  buildings  which  shelter  them  and  the  work,  and  the 
permanent  power-plant  which  drives  the  machinery,  which 
is  requisite  for  the  prosecution  of  modern  industry.  The 
term  includes  all  which  labor  employs,  but  does  not  con- 
sume or  transform,  which  labor  can  produce.  This 
definition  excludes  raw  material,  which  is,  in  one  sense, 
consumed;  more  properly,  it  is  transformed  and  passed 
on.  It  includes  all  improvements  on  land,  but  excludes 
unimproved  land,  or  site. 

Depreciation.  It  is  the  characteristic  of  capital,  which 
distinguishes  it  from  raw  material,  that  labor  aims  not 
at  its  absorption  and  transformation  into  finished  prod- 
uct, but  at  its  preservation  unchanged.  This  last  always 
proves  to  be  immediately  impossible.  All  capital  suffers 
depreciation,  or  loss  in  value,  by  use  or  by  mere  owner- 
ship.    Some  of  this  loss  is  a  function  of  time  only,  due 


PRODUCTION   AND    CONSUMPTION  21 

to  decay,  the  cost  of  protection  from  fire,  robbery,  etc.; 
some  of  it,  such  as  wear  and  tear,  occurs  only  as  an  inci- 
dent to  its  use.  Both  forms  of  depreciation  must  be  made 
good  by  labor  as  a  part  of  its  daily  task  in  the  production 
of  wealth.  Whether  the  process  be  actually  carried  out 
or  not  does  not  affect  the  result.  For  instance,  if  the 
labor  in  a  given  factory  produces  goods  to  the  valuation 
of  $1000  each  day,  and  during  the  same  day  the  deprecia- 
tion of  the  capital  employed  amounts  to  $100,  the  daily 
production  of  value  really  amounts  to  only  $900.  If  the 
capital  and  the  output  be  owned  by  the  same  parties,  the 
depreciation  may  apparently  be  neglected  and  the  goods 
sold  for  $1000;  but  the  net  increase  of  value  to  the  com- 
munity is  only  $900,  nevertheless,  and  cannot  be  disguised 
into  anything  more. 

Depreciation  is  that  portion  of  the  labor  making  use 
of  capital  which  is  exerted  in  the  maintenance  of  that 
capital  at  constancy  of  value;  it  is  an  inevitable  incident 
to  the  continuous  prosecution  of  productive,  tool-using 
labor.  Although  the  emendations  to  the  capital  often 
enter  the  factory  apparently  as  portions  of  current  sup- 
plies, or  even  as  of  raw  material,  or  are  merely  charged 
up  on  the  books  without  concrete  incorporation  into  the 
actual  property, — or  although  it  may  be  impossible  to 
maintain  the  property  in  constancy  of  value,  owing  to  its 
becoming  antiquated, — depreciation  belongs  neither  to 
raw  material,  nor  to  capital,  nor  to  interest;  nor  is  it 
chargeable  against  any  other  account  than  labor.  It  is 
labor's  net  cost  incurred  in  using  the  capital,  in  preference 
to  working  without  it.  The  real  gain  to  labor  due  to  its 
use  is  found  by  deducting  from  the  apparent  gain  the 
depreciation.^ 

1  Since  raw  material  is  equally  chargeable  against  labor  before  any  net 
production    of   value    may   be   considered    to   have   taken    place,    and    since 


22  THE    COST    OF    COMPETITION 

Wealth.  The  purpose  of  the  activity  of  the  Industrial 
and  commercial  organization  of  the  country  is  the  pro- 
duction of  wealth.  It  is  commonly  supposed  that  this 
production  of  wealth  consists  merely  of  the  activity  of 
labor  (using  that  term  in  its  broadest  sense)  engaged  in 
operation  upon  raw  material  with  the  aid  of  land  and 
tools.  If  the  situation  be  examined  more  critically,  how- 
ever, it  will  develop  that  it  cannot  be  so  tersely  described, 
with  accuracy,  even  when  assigning  to  the  words  their 
broadest  significance. 

The  word  wealth  is  commonly  defined  as  that  which 
has  valuation  in  exchange,  and  that  definition  will  be 
adhered  to  here.  Wealth  is  the  concrete  of  which  valua- 
tion is  the  abstract.  But  we  have  already  drawn,  as  a 
fundamental  idea,  a  wide  distinction  between  Valuation 
and  Value.  Diamonds  possess  a  high  valuation,  and  con- 
stitute wealth  of  the  most  unquestionable  sort;  but  they 
possess  almost  no  value.  A  pure  and  ample  water-supply, 
on  the  other  hand,  is  of  the  very  highest  value  for  the 
support  of  human  life  upon  any  appreciable  scale;  yet  the 
degree  to  which  such  a  natural  resource  possesses  valua- 
tion and  constitutes  wealth  is,  while  existent,  insignifi- 
cantly out  of  proportion  to  the  degree  to  which  it  pos- 
sesses value.  The  water-supply  is  practically  incapable  of 
exchange,  and  is  generally  deemed  not  a  fit  basis  for  the 
development  of  pecuniary  profit.  Hence  it  falls  mainly 
outside  of  our  definition  of  wealth. 

Yet,  in  the  selection  of  factors  of  fundamental  impor- 
tance, it  was  Value,  and  not  Valuation,  which  appeared 
as  the  sole  firm  basis  for  the  raising  of  either  an  economic 
philosophy  or  a  nation.     Therefore,  since  it  does  stand, 

both  raw  material  (except  in  the  most  primitive  cases)  and  depreciation 
actually  made  good  are  both  crystallized  forms  of  labor,  depreciation  will 
hereafter  sometimes  be  classified  as  one  form  of  raw  material.  But  it  is 
not  really  so,  with  perfect  accuracy. 


PRODUCTION   AND    CONSUMPTION  23 

as  a  present  fact,  that  the  universally  accepted  idea  of  the 
economic  world  regards  its  duty  solely  as  the  creation  of 
wealth,  and  since  it  now  appears  that  wealth  and  value 
are  fundamentally  distinct  ideas,  it  seems  all-important  to 
investigate  carefully  the  difference  between  the  two.  The 
natural  program  for  this  investigation  is  first  to  examine 
the  process  of  the  production  of  Value,  and  afterwards 
to  turn  our  attention  to  the  creation  of  Wealth,  or  Valua- 
tion. It  will  aid  the  clearness  of  this  task  if  we  reserve 
the  familiar  word  "  production  "  solely  for  the  activity 
aimed  at  the  development  of  Value,  choosing  other  terms, 
in  due  time,  to  indicate  activities  looking  toward  the 
acquisition  of  wealth  and  therefore  to  be  contrasted  with 
what  is  here  to  be  called  production. 


Production 

Production.  In  the  production  of  wealth  by  the 
addition  of  value  to  raw  material,  labor  undertakes  two 
sorts  of  processes,  viz. :  transformation  and  transportation. 

Transformation  is  the  increase  in  the  value  of  the 
raw  material, by  the  alteration  of  its  form:  by  its  sorting, 
cleansing,  grinding,  burning,  smelting,  baking,  molding, 
machining,  polishing,  painting,  packing,  etc.,  so  that  it 
possesses  a  greater  potentiality  for  the  support  of  human 
life  than  it'  did  before. 

Transportation  is  the  addition  of  value  to  a  com- 
modity by  the  alteration  of  its  locality,  without  change  of 
form.  (The  definition  is  purposely  worded  to  exclude 
any  alteration  in  the  locality  of  a  commodity  which  does 
not  enhance  its  value,  that  is,  which  does  not  increase  its 


24  THE    COST    OF    COMPETITION 

potentiality  for  the  support  of  human  life.  Effort  of  this 
last  sort  will  receive  its  proper  classification  at  a  later 
point  in  the  analysis.) 

Although  this  definition  is  of  the  simplest  form  and 
although  the  industry  of  transportation  is  one  of  the  most 
familiar  to  all  observers,  it  is  worth  while  to  arrest  atten- 
tion for  a  moment  upon  the  magnitude  and  importance 
of  this  branch  of  production.  The  underlying  idea  is 
very  simple.  For  instance,  a  bushel  of  corn  grown  in  the 
center  of  an  agricultural  district,  where  there  is  a  surfeit 
of  corn,  possesses  very  little  value.  It  frequently  happens 
that  its  sole  value  is  for  use  as  fuel.  In  such  case  it  is 
because  all  the  corn  which  could  be  eaten,  in  that  locality, 
has  been  eaten ;  as  food  it  has  done  all  possible  to  support 
life;  yet  there  remains  a  surplus  in  surfeit.  If  this  sur- 
plus be  transported  to  a  mining  or  a  manufacturing  dis- 
trict, where  there  is  a  surfeit  of  mechanical  labor  but  a 
dearth  of  natural  food-supplies,  without  any  alteration  in 
its  form  or  nature  whatever,  it  becomes  immediately  of 
great  potentiality  for  the  support  of  additional  life. 

This  is  the  sole  natural  reason  for  the  world's  present 
enormous  investment  and  current  expenditure  in  steam- 
ships, railroads,  wagons  and  horses,  and  their  supplies. 
It  is  the  one  largest  single  industry  of  the  world:  for  a 
large  portion  of  the  fixed  factories  of  the  land  are  really 
only  accessory  portions  of  our  transportation-system, 
making  steel  ship-plates  or  railway-rails,  marine  or  loco- 
motive steam-engines,  upholstery  for  cars  and  cabins, 
navigating-instruments  and  tables,  horseshoes,  coal,  sails 
and  cordage,  signals,  what  not.  Add  to  this  the  wages 
of  the  millions  of  sailors,  railroad-men  and  teamsters 
employed  and  the  sum  total  is  appalling.  This  entire 
current  expense  to  the  world  must  be  made  up  and  over- 
balanced by  the  gain  in  value  due  to  mere  change  in  the 


PRODUCTION   AND    CONSUMPTION  25 

locality  of  the  commodities  handled,  or  it  would  not  con- 
tinue to  exist. 

Labor,  in  its  efforts  at  the  transformation  and  trans- 
portation of  material  commodities,  cannot  work  under 
the  guidance  of  its  own  intelligence  alone.  No  amount 
of  education  may  ever  hope  to  effect  that.  The  laborer 
may  be  most  skilled  in  his  work,  but  his  task  covers  only 
a  small  portion  of  the  total  purpose  to  be  accomplished. 
If  he  gives  proper  attention  to  his  work  he  cannot  also 
have  a  proper  survey  of  its  relations  to  the  efforts  of 
others.  He  fails  to  develop  the  best  judgment  as  to  the 
most  profitable  kind  and  degree  of  effort  to  exert.  He 
lacks  proper  perspective  in  viewing  the  relations  between 
his  own  pet  task  and  the  needs  of  the  rest  of  the 
community. 

Someone  must  be  reserved  from  the  duty  of  prosecut- 
ing the  actual  details  of  the  work  in  order  that  he  may 
retire  to  a  little  distance,  obtain  this  needed  perspective 
and  cultivate  broad-mindedness  and  judgment.  He  needs 
to  have  accurate  observation  of  the  peculiarities  of  the 
individual  workmen.  He  must  not  fail  in  skillful  appre- 
ciation of  the  external  environment  to  the  work.  It  will 
not  do  to  let  goods  be  produced  which  the  public  do  not 
need  or  want.  Fo.resight  is  also  w.anted  as  to  future 
alterations  in  this  environment:  to  va.riations  in  supplies 
of  raw  material,  to  fluctuations  in  demand  from  the  pur- 
chasing public.     Such  is  the  office  of 

Superintendence.  To  direct,  coordinate  and  control 
the  efforts  of  labor,  in  order  to  bring  it  into  a  maxi- 
mum efficiency  of  subdivision  of  work  anci  of  agreement  be- 
tween inside  possibilities  and  outside  conditions  and  needs. 
The  first  and  most  perfect  development  of  superintend- 
ence arose  in  connection  with  military  operations,  which 


26  THE    COST    OF    COMPETITION 

must  be  considered  as  one  department  of  productive  labor, 
so  important  formerly  to  community-life  was  common 
self-defense.  The  reduction  of  the  community  of  military 
laborers  to  a  maximum  of  efficiency,  in  so  far  as  discipline 
and  direction  can  do  it,  has  never  been  surpassed,  in 
degree  or  perfection,  in  any  other  line  of  work.  All 
more  modern  forms  of  superintendence  are  but  the  off- 
spring of  this  more  or  less  remote  ancestor. 

Accountance.  A  department  of  labor  which  may  or 
may  not  be  reckoned  as  belonging  to  superintendence 
is  accountance.  Whether  it  is  to  be  so  classed  or  not 
makes  very  little  difference  to  the  true  understanding  of 
the  economic  system.  On  the  other  hand,  it  is  quite  essen- 
tial to  such  an  understanding  that  clear  distinction  be 
drawn  between  two  sorts  of  accountance,  one  of  which  is 
properly  to  be  classed  as  a  sort  of  productive  labor  and 
the  other  as  something  quite  different.  The  first  sort  is 
that  which  accounts  for  the  things  produced:  the  shop- 
order  book,  the  stock-list  and  the  shop-cost  accounts,  etc. 
Definition  of  the  other  sort  of  accountance  will  be 
deferred  until  later  in  the  analysis. 

Design.  A  modified  form  of  the  direction  or  super- 
intendence of  labor  is  that  of  design.  When  it  borders 
upon  the  artistic  it  of  course  calls  for  a  very  different 
species  of  ability  from  that  best  adapted  for  true  superin- 
tendence. Yet  the  need  for  it  lies  very  closely  in  the  same 
class,  and  in  the  following  pages  no  further  distinction 
needs  to  be  drawn  between  the  two.  Design  includes  the 
work  of  the  artist,  the  engineer,  the  chemist,  the  author, 
the  educator  and  the  drafter  of  proposed  laws,  as  well  as 
the  lower  orders  of  current  conventional  design. 

Invention.  When  the  design  lies  in  a  field  not  pre- 
viously   trodden    it    is    called    invention.      The    questions 


PRODUCTION   AND    CONSUMPTION  27 

involved  in  the  special  value  to  be  assigned  to  novelty  of 
invention,  to  secure  which  to  the  inventor  is  the  object  of 
the  patent-offices  of  the  world,  will  not  be  entered  upon 
between  these  covers.  It  is  an  important  field,  but  it  is 
irrelevant  to  our  main  purpose.  Excluding  these  con- 
siderations, then,  invention  reduces  to  merely  one  depart- 
ment of  design,  that  is,  to  one  sort  of  superintendence. 

Such  is  the  complete  skeleton  of  our  system  of  produc- 
tion. There  has  been  as  yet  no  discussion  of  Methods 
with  which  to  clothe  the  skeleton  with  flesh  and  form,  but 
otherwise  the  structure  is  complete.  The  original  raw 
material  from  the  earth  undergoes  transformation  at  the 
hands  of  labor.  Not  all  of  the  transformation  being  accom- 
plished in  one  locality,  nor  any  of  it  in  the  place  of  con- 
sumption, transportation  is  added:  at  first  from  hand  to 
hand,  then  from  factory  to  factory,  finally  to  the  con- 
sumer. In  bath  processes  labor  makes  use  of  capital,  or 
tools,  the  current  depreciation  of  which  it  must  make  good 
as  it  goes.  In  both  processes  it  receives  direction  from 
superintendents,  designers  and  inventors.  These  things 
together  land  at  the  door  of  the  Consumer  what  he 
absorbs  in  the  maintenance  of  his  existence.  From  the 
original  mine  or  field  or  forest  to  the  finished  package 
laid  in  the  hands  of  him  who  permanently  destroys  it, 
by  its  absorption  in  the  support  of  human  life  and  not  by 
its  transformation  into  other  things,  is  the  field  of  Pro- 
duction. It  is  most  important  that  this  field  of  activity 
be  not  confused  with  any  other  class  of  human-effort  here- 
inafter to  be  introduced  into  this  scheme  of  analysis. 
Therefore  the  following  schedule  is  presented,  to  display 
clearly  its  several  parts  in  their  proper  relation  to  each 
other  and  to  define  them  accurately  in  their  segregation 
from  all  other  industrial  or  commercial  activities: 


28  THE    COST    OF    COMPETITION 

PRODUCTION  =  the     Transformation     plus     the 
Transportation  of  Raw  Material,  viz.: 

Stock  and 

Incidental   Current   Sup- 
plies; 

From  the  Natural  Source, 

viz. :  The  Field, 

The  Forest, 
The  Mine  or 
The  Sea; 

By  Labor,  viz. :  Productive  Labor  proper, 

Unskilled  and  Skilled; 
Labor  devoted  to  over- 
coming Depreciation, 
and 
Superintendence^  includ- 
ing: 

Organization       and 
direction    of    the 
actual  effort, 
Design,   and 
Invention ; 

With  the  use  of  Capital, 

viz. :  Improvements   on   Land, 

Buildings  and  all 
Tools,      including      both 
Hand-Tools   and   Ma- 
chinery; 

To  its  Natural  Destination,  viz. :  The  Ultimate 
Consumer. 


PRODUCTION   AND    CONSUMPTION  29 

Consumption 

If  a  closed  community  be  imagined,  that  is,  one  carry- 
ing on  no  trade  with  other  outside  communities,  the  pro- 
ducers would  all  be  consumers  also,  each  individual  con- 
suming what  some  other  individual  produced.  Such  a 
body  politic  would  maintain  itself  in  perfectly  continuous 
operation,  without  any  aid  from  any  accessory  process, 
activity,  organism  or  source  of  energy  whatever,  with- 
out or  within,  so  long  as  the  supplies  of  original  raw 
material :  the  mines,  the  fields  and  the  forests,  held  out. 
Such  a  self-supporting  body  politic,  in  essential,  is  each 
state.  Foreign  trade  may  come  as  an  addition  to  these 
activities,  broadening,  enriching  and  elevating  the 
national  life  above  what  it  otherwise  would  be.  Other 
internal  activities  may  be  added  to  the  purely  materialistic 
ones  just  listed.  These  may  be  good  and  wholesome,  and 
if  so  they  may  be  classed  merely  as  another  sort  of  pro- 
ductive labor;  the  terms  production  and  consumption  may 
then  be  expanded  to  include  the  less  tangible  forms  of 
life-support  supplied  by  religious,  artistic  or  scientific 
inspiration.  Or  they  may  be  evil  and  destructive,  and 
therefore  never  to  be  classed  as  productive.  But  what- 
ever additon  of  the  latter  sort  may  be  necessary  in  order 
to  completely  include  all  social  activities  within  our 
category,  It  Is  plain  that  the  former  classification  Includes 
and  exhibits  all  which  may  In  any  wise  be  regarded  as  the 
basis  of  the  community-life.  At  the  bottom,  as  its  foun- 
dation, the  state  must  be  what  has  just  been  defined. 
However  momentary  exaltation  or  dementia  may  thrust 
up  some  short-lived  peak  of  attainment  above  the  mean 
level  of  life-support,  the  stable  surface  of  natural  life 
may  never,  under  the  law  of  the  conservation  of  energy, 
hope  to  rise  permanently  and  in  equilibrium  above  the 


30  THE    COST    OF   COMPETITION 

level  to  which  It  Is  nurtured  by  Its  own  current  Produc- 
tion of  Value,  as  just  defined.  Lower  than  this  It  may  be, 
it  is  true.  Moral  obliquity  on  the  part  of  the  Individual, 
false  religion,  false  law,  false  public  opinion  or  a  racial 
unfitness  to  environment  on  the  part  of  the  community, 
may  slur  the  natural  result  to  be  expected  from  the  metab- 
olism of  this  current  supply  of  Value.  The  efliciency  of 
transformation  of  economic  Into  biological  energy  may 
be,  and  no  doubt  usually  Is,  less  than  unity.  But  no 
Imaginable  force  may  ever  make  it  greater.  The  sole 
measure  not  only  of  the  economic  but  also  of  the  political 
and  ethical  strength  and  independence  of  a  country  is  the 
extent  and  the  skill  with  which  the  aggregate  process  out- 
lined above  is  carried  on.  The  nobility  and  purity  of  Its 
life  depends  upon  the  degree  to  which  all  extraneous, 
vitiating  activities  are  excluded.  It  alone  produces  Value. 
It  alone  contributes  to  the  body  politic  the  various  foods 
upon  which  all  current  existence, — all  work,  all  play,  all 
genius,  all  patriotism, — maintains  Itself  and  upon  which 
all  growth,  of  whatever  sort,  is  based.  What  a  country 
lacks  of  Production,  as  defined  above,  It  fails  of  real 
existence,  is  become  a  pretense  and  a  parasite,  fed  by 
others  and  revealing  their  strength,  not  its  own.  No 
claim  may  it  lay  to  the  nobility  and  divinity  of  life,  except 
as  may  a  fossil  shell  which  still  reveals  the  beauty  of  a 
life  that  is  past  and  gone,  or  as  the  tottering  Impotence 
of  a  senility  which  mankind  protects  and  reveres  for  what 
It  has  been.  What  a  country  possesses  over  and  above 
material  Production  may  be  more  complex  or  more  deli- 
cate, or  at  least  more  highly  esteemed;  but  it  Is  all  the 
fruit,  the  foster-child,  the  slave, — the  dependent  or 
resultant,  under  what  name  you  please, — of  Production: 
fed  by  it  alone,  rising  possibly  when  it  flourishes,  dying 
certainly  when  it  falls  Into  decay. 


PRODUCTION   AND   CONSUMPTION  31 

Exchange.  The  value  which  each  laborer  in  such 
a  productive  community  consumes  in  support  of  his  own 
life  is  that,  or  a  portion  of  that,  which  he  has  himself  pro- 
duced. Originally,  in  pioneer  life,  this  was  literally  so. 
Everything  which  the  individual  possessed  was  wrung 
from  the  soil  by  his  own  direct  efforts.  He  cleared  the 
land,  built  the  house,  raised  crops,  chased  game  for 
food  and  maintained  flocks  for  the  manufacture  of  cloth- 
ing; the  housewife  performed  all  sorts  of  productive 
operations  now  relegated  to  the  factory.  - 

To-day  all  this  is  changed.  Each  man  specializes  upon 
the  production  of  one  thing  and  produces  that  one  to  an 
amount  which  would  constitute  an  enormous  surfeit,  were 
he  and  his  family  the  sole  consumers  of  it.  But  to-day 
universal  Exchange  enters,  whereby  he  is  enabled  to  trade 
the  bulk  of  the  special  thing  which  he  produces  for  the 
product  of  other  laborers'  toil.  But  what  he  receives 
and  consumes  is  none  the  less  the  value  which  he  himself 
produced,  although  it  may  not  be  the  identical  article. 
While  he  has  exchanged  forms  of  value,  he  has  not 
altered  amounts;  he  cannot  get  something  for  nothing. 
What  he  gives  must  be  the  equivalent  in  value  of  what  he 
gets.  Unless  he  has  produced  value  he  cannot  consume 
value. 

Therefore  let  all  fiction  regarding  the  income  of  pro- 
ductive labor  being  drawn  from  capital,  or  of  its  being 
presented  by  employers,  be  forever  sunk  into  oblivion. 
The  laborer,  unless  he  be  interfered  with,  gets  what  value 
he  produces.  He  gets  It  because  he  produces  it.  No 
complexity  of  method  may  ever  alter  or  more  than  dis- 
guise that  fact.     He  produces  it  because  he  wants  it,  for 

~  In  all  such  economic  discussion  the  family  appears,  of  course,  as  a 
unit,  represented  by  the  father  or  other  male  head.  It  is  also  to  be  noted 
that  this  method  of  life  has  now  gone  irretriev^ably  from  us,  by  a  progress 
in  the  arts  and  sciences  which  cannot  be  reversed. 


32  THE    COST    OF    COMPETITION 

consumption  in  support  of  life.  The  opportunity  to  do 
these  things:  to  produce  and  to  consume  is  a  part  of  Life. 
Where  it  comes  from  does  not  concern  Economics.  It  is 
commonly  accepted  that  God  gave  it,  with  all  the  respon- 
sibilities and  privileges  appertaining  thereunto.  If  the 
life  and  the  privilege  of  living  be  ever  found  to  have  been 
separated,  it  is  because  man  has  sundered  what  God  had 
joined. 

The  income  of  value  enjoyed  by  Labor,  therefore,  is 
what  it  produces,  or  some  part  of  it.  Accident  or  design 
may  make  the  income  less  than  the  total  amount  pro- 
duced, by  the  destruction  or  abstraction  of  some  portion. 
Nothing  can  ever,  by  any  possibility,  make  it  greater, — 
except,  of  course,  by  the  gratuitous  addition  to  it  of  some- 
thing taken  from  some  other  fraction  of  the  laboring 
body. 

Productivity.  The  current  amount  of  value  pro- 
duced by  an  individual  or  a  class  or  a  community,  or  its 
rate  of  production,  is  called  its  productivity.  It  can  occur 
only  as  a  result  of  activity  of  some  of  the  sorts  already 
listed  as  together  constituting  Production. 

Wages.  The  portion  of  its  productivity  actually  re- 
ceived by  an  individual  or  a  class  is  called  its  wages. 
Wages  might,  and  theoretically  ought  to,  equal  produc- 
tivity. In  actuality  it  is  always  something  less.  The 
ratio  of  wages  to  productivity,  for  an  Individual  or  a  com- 
munity, will  hereinafter  be  known  as  its  earning  efficiency. 
From  the  above  it  is  plain  that  the  term  wages  covers 
the  income  of  all  of  the  different  sorts  of  activity  listed 
under  Production.  With  many  of  these  sorts  the  actual 
payment,  in  real  life,  is  known  as  salary.  Such  is  the  case 
with  most  superintendence.  With  other  sorts  it  is  known 
as  professional  fees.     Such  is  the  case  with  medical  prac- 


PRODUCTION   AND   CONSUMPTION  33 

titloners,  for  instance.  They  fall,  In  economic  analysis, 
under  the  head  of  skilled  labor;  that  is,  they  produce 
value  and  they  produce  it  by  their  own  exertions,  not  by 
those  of  others.  The  economic  Idea  of  wages,  therefore, 
is  far  different  from  the  popular,  but  loose  and  useless, 
Idea  of  the  term:  of  a  dollar  or  so  per  day  paid  to  an 
ordinary  laborer,  or  even  of  five  times  that  sum  paid  to  a 
skilled  manual  operative.  The  economic  term  wages 
makes  no  distinction  whatever  between  mental  effort  and 
brute  strength;  It  relies  solely  upon  the  fact  that  the 
wealth  received  comes  as  a  return  for  effort  expended  In 
the  production  of  value. 

Consumption.  Where  these  processes  which  we  have 
just  defined  collectively  as  production  end.  Consumption 
begins.  There  Is  no  natural  interim.  Everything  in  the 
nature  of  the  transformation  or  transportation  of 
material  previous  to  its  actual  consumption  (except  trans- 
portation, which  does  not  result  in  increase  of  value)  must 
be  regarded  as  existing  solely  for  its  sake.  The  necessity 
of  consumption  in  order  to  maintain  life  is  the  sole 
economic  reason  for  production.  That  which  does  not 
alter  the  form  or  character  of  the  article  itself  Into  a 
greater  potentiality  for  the  support  of  life,  or  in  moving 
It  really  toward  the  Consumer,  Is  not  aiding  In  satisfying 
Consumption  and  cannot  be  called  a  part  of  Production. 

This  sweeping  statement  will  receive  much  more  atten- 
tion and  support  later  in  the  argument.  It  is  announced 
here  In  order  to  attain  accuracy  of  definition  and  to  draw 
preliminary  attention  to  an  all-important  but  universally 
neglected  distinction. 

Further,  the  Consumer  must  not  be  confused  with  other 
economic  classes  by  including  under  the  same  term  the 
Purchaser.     The  purchaser  is  not  a  consumer  unless  he 


34  THE    COST   OF   COMPETITION 

consumes,  unless  he  purchases  solely  for  his  own  consump- 
tion, for  destructive  biologic  absorption,  and  not  for  fur- 
ther sale  or  manufacture.  To-day  the  great  majority  of 
purchasers  represent  not  only  Intermediate,  Incidental 
steps  In  the  great  process  of  Production,  but  they  represent 
activities  which  are  not  even  incidental  thereto,  but  which 
occupy  a  quite  distinct  class  because  evincing  a  quite  dis- 
tinct nature. 


Ill 

SPECIALIZATION   AND   COORDINATION 

FROM  the  bare  essentials  of  the  process  of  produc- 
tion attention  may  now  progress  to  a  considera- 
tion   of   its   parts    and   of   the    method   of   their 
inter-relation. 

Modern  methods  of  production  not  only  illustrate,  but 
they  are  fundamentally  characterized  by,  a  law,  a  pro- 
cess, which  runs  continuously  and  insidiously  through  all 
forms  of  organic  existence.  Not  only  are  all  economic 
processes  based  upon  it,  but  all  other  organisms  than  the 
economic  body  politic  exemplify  it,  in  its  broadest  sense, 
in  their  animate  activities.  So  universally  does  this  law 
underlie  all  natural  phenomena,  including,  therefore,  all 
economic  phenomena,  that  it  is  necessary  to  devote  to  its 
discussion  this  separate  chapter.  All  through  the  current 
work  it  will  be  referred  to  and  exemplified  repeatedly. 
Only  when  this  argument  is  finished  will  the  reader  pos- 
sess the  writer's  sense  of  its  importance  in  economic 
thought.  This  law  Is  that  of  coordination  and 
specialization. 

It  can  be  defined  best  by  illustration,  and  for  this  pur- 
pose it  must  be  reduced  to  Its  simplest  possible  form. 
To  this  end  will  be  appropriated  Mr.  Walker's  familiar 
illustration  of  the  typical  primordial  economic  society: 
the  supposititious  colony  of  fishermen  abiding  upon  a  rocky 
shore  and  relying  solely  upon  the  sea  for  Its  food-supply. 
It  Is  to  be  supposed  that  It  possesses  no  boats  nor  other 
implements  of  its  trade,  except  the  simplest  hooks  and 

35 


36  THE    COST    OF    COMPETITION 

lines.  In  It  the  head  of  each  family  must  be  regarded  as 
supplying  by  his  own  labor  all  of  the  wealth  consumed 
therein;  and  that  wealth  must  consist  solely  of  fish. 

Under  these  primitive  conditions  of  production  man 
would  be  subject  to  the  maximum  of  hardship  and  of 
uncertainty  of  existence  and  the  minimum  of  comfort  and 
ease.  The  natural  expansion  of  population  would  soon 
bring  life  into  sharp  contact  with  that  limiting  law  of 
primitive  existence. 


The  Law  of  Diminishing  Returns 

This  law,  stated  most  briefly,  covers  the  fact  that,  as 
increasing  supplies  of  labor  are  expended  upon  a  given 
natural  field  of  effort,  the  return  to  each  additional  laborer 
becomes  inevitably  less  and  less;  that  is,  on  any  given  fish- 
ing-waters, or  hunting-ground,  or  tillable  field,  or  natural 
opportunity  of  any  sort  whatever,  the  greater  the  amount 
of  labor  or  the  greater  the  number  of  workers  on  that 
field  the  less  must  be  the  return  per  unit  of  labor.  The 
first  comer  gets  the  most  fertile  portion  of  the  field  or 
raises  that  amount  of  grain  which  grows  with  the  least 
attention;  perhaps,  as  in  savage  life,  using  only  that  which 
grows  without  any  cultivation.  Each  additional  bit  of 
labor  is  spent  in  forcing  from  more  and  more  reluctant 
soil  a  smaller  and  smaller  response  In  fruit. 

In  the  present  Illustration,  In  the  colony  of  fishermen, 
the  best  fishing-grounds  would  soon  be  monopolized  or 
fished  out.  Less  productive  ones  would  have  to  be 
resorted  to  by  the  later  comers,  and  as  the  community 
grew  In  size  the  average  production  of  fish  per  man  would 
grow  steadily  less  and  less.  Moreover,  from  the  adver- 
sity of  variation  In  natural  condition  of  environment  there 


SPECIALIZATION    AND    COORDINATION       37 

would  be  no  shelter.  When  fish  were  plenty  all  would  be 
well;  but  when  fish  were  scarce  the  population  which  had 
been  allowed  to  come  into  existence  by  the  previous  plenty 
would  have  no  other  recourse  than  to  starve. 

Finally,  a  diet  so  narrow  as  an  unvaried  one  of  fish, 
even  in  plenty,  would  be  quite  inadequate  to  support  a 
grade  of  life  higher  than  a  very  low  type  of  savage. 
Nevertheless,  for  the  sake  of  clearness  of  analysis,  it  is  to 
be  supposed  that  primarily  these  people  had  nothing  to 
eat  but  fish. 

The  conditions  which  are  thus  illustrated  in  their 
simplest  form,  if  assumed  to  apply  to  the  whole  of  modern 
society,  with  its  complex  organization,  would  place  it 
approximately  in  the  same  precarious,  uncomfortable  and 
primitive  condition  as  to  its  food-supply  that  weighs  upon 
savage  life.  The  only  difference  would  be  in  degree.  All 
that  is  necessary  for  this  assumption  is  to  suppose  the 
exaggeration  of  the  law  of  diminishing  returns  to  cover 
every  form  of  raw  material,  instead  of  a  single  one,  and 
the  most  civilized  society  must  stand  face  to  face  with 
more  or  less  complete  famine  at  all  times.  The  devices 
of  scientific  production  for  meeting  this  state  of  affairs: 
the  invention  of  more  rapid  and  efficient  machine-methods 
as  a  substitute  for  hand-labor,  the  accumulation  of  stocks, 
the  development  of  cold-storage  warehouses,  etc.,  could 
never  hope  to  do  more  than  modify  this  rigorous  fate, 
never  to  remove  it.  So  long  as  each  man  should  confine 
his  efforts  to  the  supply  of  his  own  wants,  and  his  methods 
to  those  of  his  neighbors,  no  matter  how  rapidly  all  might 
improve  their  methods  simultaneously,  the  community 
must  always  find  itself  periodically  face  to  face  with  famine. 

This  assumption,  backed  as  it  is  by  the  more  than  super- 
ficial evidence  that  this  is  just  the  situation  in  which  even 
civilized  humanity  finds  itself,  has  actually  been  made  and 


144637 


38  THE    COST    OF    COMPETITION 

formally  enunciated,  now  nearly  a  century  ago.  It 
received  prompt  and  wide  adoption,  under  the  name  of 
the  Malthusian  doctrine,  after  its  propounder,  Mr.  Mal- 
thus.  Translated  into  the  most  general  terms,  to  fit 
broadly  all  occasions,  this  doctrine  may  be  stated  as 
follows : 

That  population  tends  to  increase  with  a  geometric 
ratio,  while  the  increase  in  total  productivity  is  not  pro- 
portional to  it.  Hence,  the  growth  of  population  expands 
against  the  limits  of  food-supply  as  a  balloon  against  its 
net,  and  must  perforce  burst  its  bounds  in  ugly  waste  of 
life  in  "  war,  famine  and  pestilence." 

This  doctrine  fell  upon  the  public  ear  at  a  time  when 
British  labor-agitation  and  factory-legislation  made  it 
very  acceptable  to  the  privileged,  and  hence  conservative, 
classes.  It  was  hailed  as  conclusive  proof  that  the  horror 
of  a  "  surplus  population  "  was  inevitable,  that  it  was 
from  the  hand  of  God,  and  that  legislation  looking 
toward  Its  modification  or  amelioration  was  therefore 
futile  and  absurd. 

This  attitude  and  doctrine  have  survived  until  the 
present  day  with  surprising  tenacity.  The  privileged 
classes  love  the  doctrine,  because  it  frees  their  conscience 
from  pressure  toward  the  modification  of  their  privileges. 
The  doctrinaires  love  it  because  it  includes  a  reference  to 
the  great,  underlying  law  of  all  human  existence,  of  all 
organic  existence,  in  fact,  which  has  not  yet  attained  its 
zenith  and  become  mordant:  That  the  natural  force  of 
growth  will  always  press  against  the  natural  limitations 
of  free  growth  until  pain  results.  But  this  broad  law  has 
never  broadly  justified  the  artificial  perpetuation  of 
unnecessary  pain.  Man's  instinctive  revolt  against  suffer- 
ing on  the  part  of  his  fellow-man  has  proven  more  accu- 
rate, in  experience,  than  has  the  half-work  of  pure  intellect. 


SPECIALIZATION    AND   COORDINATION       39 

For  a  broad  glance  over  the  past  shows  that  every  atom 
of  accumulated  history,  taken  in  its  proper  relation  to  the 
rest  and  not  piecemeal,  gives  the  denial  to  the  broad  and 
exclusive  applicability  of  the  Malthusian  doctrine.  The 
average  individual  productive  power  has  too  obviously 
increased,  and  not  decreased,  taking  all  classes  into 
account,  with  the  passage  of  the  centuries.  The  average 
activity  of  famine,  pestilence  and  war  in  human  affairs  is 
steadily  on  the  decline.  No  party  is  so  vehement  in  urg- 
ing that  wages  and  standards  of  living  are  higher  to-day 
than  ever  before  as  is  the  laissez-faire  school  of  conserva- 
tives; yet  they  are  the  very  ones  who  cling  to  the  Mal- 
thusian idea  with  the  energy  of  despair. 

The  suspicions  which  are  aroused  by  these  fundamental 
discrepancies  between  the  facts  of  history  and  the  Mal- 
thusian doctrine  are  rapidly  aggravated  when  inquiry  is 
made  into  the  basis  for  its  projection.  This  basis  Is  the 
assumption  that  the  law  of  decreasing  returns  may  prop- 
erly be  applied  to  modern  economic  society  as  a  whole. 
Let  us  Investigate  the  validity  of  this  assumption. 

The  effectiveness  of  the  law  of  decreasing  returns 
depends  absolutely  upon  one  assumption  in  the  premises, 
viz. :  That  each  additional  item  of  labor  expended  upon 
a  given  natural  field  of  opportunity  shall  take  up  the  same 
task  in  the  same  manner  as  that  already  at  work.  The 
newcomers  must  use  the  same  tools  and  the  same  methods 
as  those  already  in  use.^  The  raw  material  must  pass 
through  the  various  pairs   of  hands   in  parallel,   as  the 

1  The  reader  is  to  note  most  carefully  that  improvement  in  method,  by 
the  application  of  inventive  science,  is  no  answer  at  all  to  this  situation, 
except  in  so  far  as  it  may  aid  one  individual  or  class  for  a  short  period  of 
time.  So  soon  as  the  improved  method  has  become  a  matter  of  general 
adoption  the  situation  is  just  what  it  was  before  the  invention  was  made, 
as  to  the  jeopardy  of  life  and  happiness.  A  larger  population  has  sprung 
into  existence  and  enjoys  that  jeopardy,  but  that  is  the  sole  gain. 


40  THE    COST    OF   COMPETITION 

electricians  say,  dividing  itself  between  them  quantita- 
tively. Under  this  assumption,  and  this  only,  the  law 
holds  true  and  the  resultant  famine  and  pestilence 
ensue. 

Fortunately,  this  is  an  assumption  which  is  warranted 
In  the  current  history  of  modern  Industry  only  In  a  semi- 
occasional  and  microscopic  way.  Instead,  it  has  always 
been  true  that,  upon  any  field  of  effort  whatever,  so  soon 
as  the  natural  increase  In  population  thrust  upon  that 
field  an  amount  of  homogeneous  labor  which,  by  the  law 
of  decreasing  returns,  exerted  an  appreciable  pressure 
upon  the  workers  (political  liberty  being  assumed  to 
exist),  that  body  of  labor  split  itself  up  Into  a  number  of 
cooperative  departments,  each  concerning  itself  with  only 
a  single  portion  of  the  task.  From  a  state  of  homoge- 
neity It  became  heterogeneous. 

Under  such  conditions  the  raw  material  would  pass 
through  the  several  portions  of  the  laboring  body  in 
series,  Instead  of  in  parallel.  Within  each  portion,  of 
course,  the  work  would  be  divided  in  parallel,  according 
to  the  number  of  individuals  composing  it,  and  within 
that  portion  the  law  of  decreasing  returns  would  remain 
In  full  power.  But  to  the  now  composite  body  of  laborers 
as  a  whole  it  would  no  longer  apply.  Between  the  several 
departments  conditions  would  be  quite  different.  Each 
department  would  specialize  itself  upon  its  separate  por- 
tion of  the  task  and  devote  Itself  solely  to  It,  and  the  only 
limit  to  the  extension  of  this  process  lies  plainly  In  the 
number  of  workers.  Only  when  each  individual  has 
become  a  specialist,  constituting  himself  an  entire  depart- 
ment of  the  community's  work  and  developing  his  own 
special  methods,  will  the  specialization  be  complete. 

From  such  specialization  great  gain  In  eflUciency  would 
ensue.     It  would  be  derived  from  two  sources: 


SPECIALIZATION   AND   COORDINATION       41 

( 1 )  Economy  of  Time.  The  losses  of  time  Inciden- 
tal to  preparation  for  and  cessation  from  work,  both  of 
which  are  incurred  when  change  is  made  from  one  to 
another  sort  of  labor,  would  be  then  reduced  to  a 
minimum. 

(2)  Increased  efficiency  of  individual  effort,  due  to 
the  skill  which  results  from  long-continued  practice  at  one 
simple    task. 

The  illustrative  community  of  fishermen  has  purposely 
been  restricted  to  such  simplicity  that  the  process  of  sub- 
division and  specialization  of  labor  there  finds  very  little 
opportunity  for  application.  Nevertheless,  even  there  it 
is  obvious  how  great  would  be  the  increase  in  the  pro- 
ductivity of  the  entire  community  if,  instead  of  each  man 
doing  for  himself  all  of  the  different  sorts  of  thing 
involved  in  fishing,  quite  independently  of  the  rest,  the 
three  distinct  tasks:  (i)  securing  bait,  (2)  fishing  and 
(3)  transporting  fish  and  bait  along  the  shore,  were 
allotted  to  three  separate  subdivisions  of  the  laborers. 
The  gain  would  obviously  be  most  marked. 

Under  these  narrow  limits  of  possible  complexity  of 
industry  the  population  would  soon  expand  to  a  compres- 
sion against  the  limits  of  opportunity  as  painful  as  it 
was  originally.  But  this  Is  only  because  of  the  artificial 
limitation  of  complexity,  to  a  three-part  form.  If,  on  the 
other  hand,  inventive  effort  Is  supposed  to  enter,  bringing 
with  It  canoes,  dories,  trawls,  nets,  schooners  and 
steamers,  each  used  by  separate  tradesmen  in  a  specialized 
way,  the  progress  toward  the  opulence  of  to-day  Is 
obvious. 

Nor  Is  this  advance  at  all  due  to  the  ingenuity  of  the 
Inventor  and  the  efficiency  of  these  more  complex  devices. 
To  appreciate  the  truth  of  this  statement  Imagine  the 
modern  fishing-gear  completely  in  existence,  but  suppose 


42  THE    COST   OF   COMPETITION 

each  fisherman  compelled  by  law  or  his  own  Ignorance 
or  bigotry  to  do  all  of  these  several  tasks  himself,  not 
subdividing  them  and  cooperating  with  his  fellows,  but 
each  man  doing  everything  incidental  to  the  transfer  of 
the  fish  from  the  sea  to  the  table :  securing  his  own  bait, 
making  his  own  lines  and  nets,  propelling  his  own  boat, 
catching  his  fish  and  peddling  his  catch  on  shore.  Plainly 
not  a  fishing-steamer,  not  even  a  schooner  or  a  sloop 
could  leave  port;  hardly  could  a  net  be  cast,  or  a  trawl 
be  set  and  run.  Fishing  by  hand-line  would  be  the  only 
method  available;  ten  miles  from  market  would  be  the 
maximum  radius  of  operation. ' 

-  The  law,  if  it  be  stupid  enough,  may  do  this  very  thing,  may  prohibit 
labor  from  coordination  and  specialization  to  the  fullest  extent  possible 
with  the  tools  already  existant.  It  not  only  may  do  it,  but  it  now  does  it, 
in  an  equivalent  which  differs  from  the  illustration  just  presented  only  in 
the  greater  magnitude  of  its  power  for  mischief.  Massachusetts,  for 
instance,  boasts  the  finest  industrial  laws  in  the  world ;  yet  its  statutes 
throw  every  possible  obstacle  in  the  way  of  its  citizens  cooperating  with 
each  other  to  the  greatest  possible  degree,  by  their  discouragement  of  com- 
bination. In  Worcester,  for  example,  the  interurban  trolley-traffic  with 
Leicester  and  Spencer  was  forced  for  years  to  travel  along  a  crooked,  slow 
and  most  unattractive  back-route  paralleling  the  straight  Main-Street  line 
to  the  center  of  the  city,  simply  because  the  motormen  of  the  Leicester  cars 
were  forbidden  to  cooperate  with  the  operatives  of  the  local  city  lines  by 
using  the  same  tracks ;  because,  forsooth,  the  two  sets  of  men  were  employed 
by  different  competing  companies.  Since  legal  permission  to  consolidate 
was  obtained  and  the  competition  has  died  out,  the  back-route  has  been 
used  only  by  small  cars  running  thrice  hourly.  There  was  no  natural 
reason  whatever  for  any  through  traffic  passing  that  way.  Yet  for  years 
a  large  volume  of  passenger-traffic  was  artificially  compelled  by  law  to 
go  by  that  route.  How  many  hours  of  aggregate  time  and  how  many 
foot-tons  of  nervous  energy  for  how  many  people  were  wasted  for  the 
community  during  all  those  years  no  one  will  ever  know.  What  good 
the  citizens  ever  got  from  this  duplication  of  managing  companies  and 
the  competition  between  them  no  one  can  say.  The  price  was  the  same 
under  both  plans — or  even  higher,  considering  the  absence  of  transfer- 
privileges,  under  competition — and  under  competition  the  service  was  very 
much  the  poorer.  Yet  this  state  of  affairs  was  thrust  upon  us  by  Massa- 
chusetts law  and  supported  by  Massachusetts  public  opinion. 

Every  reader,  whatever  his  locality,  can  parallel  this  illustration  for  his 


SPECIALIZATION   AND   COORDINATION       43 

The  only  opportunity  for  the  further  development  of 
specialization  by  the  primitive  community  of  fishermen 
in  illustration  would  be  that  by  the  introduction  of  super- 
intendence. Each  of  the  three  departments:  of  bait- 
supply,  fishing  and  transportation,  respectively,  might  prof- 
itably allot  to  one  man,  with  assistants,  the  duties  of  fore- 
man. There  would  also  be  need  for  a  central  bureau  of 
communciation  between  the  three.  This  would  very  con- 
siderably widen  the  opportunity  for  specialization,  from 
a  three-part  to  a  seven-part  form.  By  this  added  super- 
intendence, too,  invention  would  find  its  natural  and  easy 
path  for  entrance. 

In  the  organization  thus  outlined  would  be  visible,  for 
the  first  time  in  these  pages,  the  modern  factory-system. 
Under  any  such  system  the  characteristic  of  its  method  of 
organization  is  that  it  involves 

(a)  The  subdivision  of  the  total  available  fund  of 
labor  into  parts. 

(b)  The  specialization  of  these  parts  upon  their  sev- 
eral tasks. 

(c)  A  truly  cooperative  coordination  of  the  parts  into 
a  concrete,  organic  whole.  This  subdivision  and  speciali- 
zation may  be  carried  as  far  as  the  complexity  of  the  com- 
plete task  or  the  number  of  laborers  permits.  Either  may 
constitute  the  limit.  In  the  latter  case,  of  course,  each 
department  would  consist  merely  of  a  single  laborer. 

Under  these  conditions  comes  into  operation,  in  place 

own  district.  The  entire  American  express-train  service  on  the  steam- 
roads,  of  which  we  boast  superiority  over  the  rest  of  the  world,  has  been 
rendered  possible  chiefly  by  the  consolidation  and  cooperation  of  the 
myriad  of  little  roads  of  fifty  years  ago.  There  is  hardly  a  mechanical 
device  which  now  contributes  to  speed,  comfort  and  safety  in  that  traflic 
which  would  still  be  profitably  available  were  these  consolidations  to  dis- 
solve back  into  the  multiple  independent  managements  of,  say,  1855,  when 
it  took  five  changes  of  cars  and  a  long  day's  hard  labor  to  travel  from 
Boston  to  New  York. 


44  THE    COST    OF    COMPETITION 

of  the  Law  of  Decreasing  Returns,  as  tfie  total  fund  of 
labor  increases, 


The  Law  of  Increasing  Returns 

That  when  any  two  or  more  laborers  at  a  given  task 
}plit  up  that  task  into  two  or  more  distinct  and  different 
portions,  upon  each  of  which  a  corresponding  portion  of 
the  available  labor-force  concentrates  its  efforts  and  atten- 
tion, the  average  individual  productivity  of  the  community 
is  increased,  in  proportion  to  what  it  was  previously ,  by  a 
ratio  consisting  of  some  geometric  power  of  the  number 
of  subdivisions  of  the  task. 

This  law  may  be  given  simple  mathematical  statement 
in  the  following  form:  If  P'  be  the  average  total  pro- 
ductivity of  a  community  where  the  general  body  of  pro- 
ductive labor  is  partitioned  into  m  subdivisons,  and  if  a 
be  a  coefficient,  then 

F=  am'         ...         .  (1) 

Since  the  average  individual  productivity  is  the  average 
total  productivity  divided  by  the  industrial  population, 
then,  if  n  be  the  number  of  workers,  and  p'  the  average 
individual  productivity, 

p  =z  —-  z=z  a  —  •  •  '  \^f 

n  n 

But  these  equations  can  hold  true  only  whefre  n  is  a  con- 
stant or  else  where  the  natural  opportunity  is  so  wide,  as, 
for  instance,  in  a  virgin  continent,  that  ordinary  increase 
in  the  population  feels  no  action  of  the  law  of  decreasing 
returns. 

The  effect  of  the  law  of  decreasing  returns  under  a 
pressure  of   increasing   population   against   the   limits   of 


SPECIALIZATION    AND   COORDINATION       45 

natural  opportunity  may  be  expressed  as  follows:  If  P'^ 
be  the  average  total  productivity  of  a  community  where 
the  general  productive  task  is  subdivided  between  the 
several  workers  in  parallel,  where  n  is  the  variable 
number  of  workers  and  consumers  and  Z^  is  a  coefficient, 
then 

F'=bn^         ....         (3) 

If  />"  be  the  average  individual  productivity  under 
such  conditions, 

p"=Pl^M-^        ...  (4) 

n 

If  p  be  the    average  individual  productivity  under  a 

variation  of  both  industrial  population  and  of  number  of 

subdivisions  of  task,  that  is,  the  degree  of  specialization 

•  and  cooperation  being  a  variable  and  less  than  complete, 

then 

p  =  abm'  n''''  ...  (5) 

If  It  be  assumed  that  the  degree  of  specialization  possi- 
ble is  determined  by  the  population,  the  number  of  sub- 
divisions tending  ever  to  increase  with  the  population 
until  the  number  of  workers  within  each  subdivision  re- 
mains at  a  fixed  average,  which  seems  to  be  the  condition 
of  equilibrium  in  the  face  of  economic,  inventive  and 
populatlve  growth,  then,  c  being  the  reciprocal  of  this 
minimum  number, 

m  =z  en         .  .         .  (6) 

and 

p  =ab  c'n"''-'^  C  n"*'-^  .  .  (7) 

In  this  equation  C  would  be  a  constant  for  any  known 
social  configuration,  as  would  also  be  :v  +  >*  —  i- 

In  the  actual  economic  society,  where  all  conditions  are 
constantly    fluctuating,    the    general    equation    (5)    Is   of 


46  THE    COST    OF    COMPETITION 

course  the  only  one  which  may  apply  with  accuracy. 
Nevertheless,  it  is  broadly  true  that  the  statements  made 
in  equations  (6)  and  (7)  do  apply  approximately. 

From  the  data  at  hand  it  is  impossible  to  assign  to  the 
exponents  x  and  y  any  values  at  all  exact.  Indeed,  they 
are  neither  of  them  constants.  But  from  the  form  of  the 
equations,  from  the  verbal  statement  of  the  Laws  of  In- 
creasing and  Diminishing  Returns  and  from  our  general 
knowledge  of  public  facts,  the  following  observations  may 
be  laid  down  with  confidence : 

( 1 )  The  value  of  x  must  be  a  positive  quantity,  usually 
exceeding  unity. 

(2)  The  value  of  x  will  be  a  maximum  when  m  is  a 
minimum,  and  will  always  be  an  inverse  function  of  m. 
That  is  to  say,  the  first  subdivision  of  a  homogeneous 
community  into  specialization  does  the  most  good. 
Further  subdivision  and  specialization  accomplishes  less 
and  less.  This  statement,  it  must  be  noted,  assumes  a 
stationary  condition  of  inventive  science  and,  therefore,  a 
fixed  field  for  differentiation.  But  each  step  In  advance 
In  technical  science  increases  the  complexity  and  hetero- 
geneity of  Industry,  and  hence  opens  a  new  gate  to  the 
profitable  expansion  of  specialization  and  coordination; 
that  is  to  say,  a  fresh  chance  to  increase  m  without  de- 
creasing X.  Thus  the  value  of  x  can  remain  positive  until 
the  number  of  subdivisions  has  equalled  the  Industrial 
population,  beyond  which  limit  it  is  physically  impossible 
to  go.  While  this  last  statement  may  be  strongly  ques- 
tioned, from  the  evidence  of  existing  Industrial  conditions, 
yet  it  will  develop,  before  the  anaylsis  is  finished,  that  the 
present  limitation  of  the  Indefinite  increase  of  the  variable 
tn  Is  not  due  to  the  fact  that  x  naturally  becomes  equal  to 
zero,  but  to  the  fact  that  another  and  quite  distinct  factor 
of  Inefficiency  enters  to  cancel  and  conceal  Its  effect. 


SPECIALIZATION    AND   COORDINATION       47 

(3)  The  value  of  y  must  be  positive,  but  less  than 
unity;  for  it  is  clear  that  while  an  increase  in  the  popula- 
tion, under  a  fixed  regime,  must  increase  the  difficulty  of 
production,  yet  the  difficulty  does  not  increase  in  full  pro- 
portion. Each  increment  of  population  does  succeed  in 
finding  some  addendum  to  the  natural  resources  of  the 
community  which,  even  if  decidedly  less  than  the  average 
resources  enjoyed  by  all  of  the  individuals  who  have  pre- 
ceded him,  is  still  only  slightly  less  advantageous  than 
that  enjoyed  by  the  one  individual  who  next  preceded  him 
in  the  search  for  opportunity. 

(4)  The  value  of  y  must  remain  positive,  to  whatever 
extent  the  population  may  Increase,  at  any  rate  to  any 
limit  now  visible  to  the  imagination.  For  even  if  it  be 
true  that  the  civilized  world,  in  its  occidental  expansion 
of  population,  has  now  swung  completely  around  the 
globe  and  has  begun  to  feel  a  rigid  limit  to  the  further 
expansion  of  Its  geographical  footing,  yet  the  one  signifi- 
cant fact  of  the  times  is  that  scientific  and  Inventive  re- 
search is  daily  becoming  more  rapid  and  effective  in  Its 
progress,  opening  ever  wider  fields  of  natural  resource 
quite  distinct  from  the  geographical;  while  at  the  same 
time  a  topic  of  the  day  of  growing  Importance  Is  the  rising 
fear  that  the  rate  of  increase  of  the  population  Is  in  danger 
of  decline.  While  it  will  be  shown  later  that  the  latter  Is 
an  incidental,  instead  of  a  fundamental,  factor,  yet  the 
former  is  not.  It  may  be  expected  to  grow  more  effec- 
tive with  the  progress  of  the  centuries. 

(5)  All  this  being  so,  and  consequently  the  value  of 
y  —  being  ever  negative  in  value,  It  is  plain  from  Equa- 
tion (5)  that,  under  the  normally  existent  condition  of 
affairs,  any  increase  in  the  value  of  n,  or  In  population, 
must  decrease  the  average  individual  productivity  by  set- 
ting into  operation  the  Law  of  Decreasing  Returns,  while 


48  THE    COST    OF    COMPETITION 

any  increase  in  the  value  of  m,  the  degree  to  which  the 
process  of  specialization  and  coordination  is  permitted  to 
enter,  sets  into  operation  the  Law  of  Increasing  Returns, 
to  the  elevation  of  the  average  individual  productivity. 
The  first  is  an  increase  in  the  number  of  workers  working 
in  parallel;  the  latter  is  an  increase  in  the  number  of  work- 
ers working  in  series. 

(6)  The  net  value  of  the  exponent  x^y—i  will 
depend,  of  course,  upon  the  departure  of  x  and  y  from  the 
mean  value  of  ^.  When  they  average  that  quantity  in 
value  the  value  of  the  exponent  will  be  zero,  and  the  aver- 
age individual  productivity  will  remain  stationary  under 
fluctuations  of  population  and  method;  when  they  are 
higher  in  value  the  individual  productivity  will  increase 
with  the  population;  when  they  are  less  in  value  the  indi- 
vidual productivity  will  decrease  with  the  expansion  of  the 
community.  The  natural  tendency  of  progress,  in  the 
face  of  human  nature  and  its  limits  in  intelligence  and 
adaptability,  is  for  n  to  increase  alone,  m  remaining  a  con- 
stant and  c  decreasing  in  proportion  with  n.  But  this  line 
of  progress  develops  diminishing  returns  and  places  life 
under  uncomfortable  pressure.  While  not  taking  the 
position  that  this  pressure  urges  the  individual  directly 
and  consciously  toward  specialization,  it  can  be  stated  un- 
hesitatingly that  the  agitation  resultant  from  this  pressure 
indirectly  develops  specialized  methods,  which  then  sur- 
vive as  the  most  fit;  while  the  pressure  does  directly  urge 
the  individual  away  from  the  attractive  freedom  of  inde- 
pendent action  and  lead  him  to  subject  himself  to  the 
restraints  of  cooperative  specialization.  In  both  ways, 
therefore,  increase  of  population  leads  to  a  loss  of  eco- 
nomic equilibrum  which  is  regained  only  when  m  Increases 
with  ft  and  c  remains  a  constant. 

In  this  connection,  too,  it  is  important  to  note  that  the 


SPECIALIZATION    AND    COORDINATION       49 

value  of  .V  is  greater  the  greater  Is  the  dissiiiiilarity  of  the 
several  parts  into  which  the  total  industrial  task  is  sub- 
divided for  specialization.  It  is  naturally  greatest  when 
the  subdivision  is  first  undertaken,  growing  less  and  less 
as  the  subdivision  becomes  more  effective  and  the  differ- 
entiation of  task  from  task  approaches  the  possible  limit. 
(7)  It  is  of  the  utmost  importance  to  note  that  the 
limit  to  the  degree  of  specialization  which  has  been  effec- 
tive in  history  has  seldom  or  never  been  the  physical  or 
natural  one.  In  the  various  countries  and  at  various 
times  the  social  institutions  inherited  from  the  past,  exist- 
ing in  the  form  of  law,  custom  and  popular  prejudice,  ex- 
pressed th-rough  religious  rule  or  doctrine,  caste-law, 
established  class-privilege,  monarchical  oppression,  or 
through  mere  fixity  of  mental  temperament,  have  sepa- 
rately or  together  confined  the  possibilities  of  altering  the 
methods  of  an  established  industry,  or  of  introducing  a 
new  industry,  far  below  what  they  otherwise  might  have 
been.  With  the  progress  of  human  intelligence  and  lib- 
erty throughout  the  centuries  this  limitation  has  ever  be- 
come more  and  more  elastic  and  has  given  way  more  and 
more  readily  to  the  pressure  of  individual  enterprise.  In 
our  own  country  and  times  this  combination  of  geograph- 
ical, political  and  Intellectual  liberty  is  apparently  greater 
than  at  any  other  time  or  place.  In  consequence,  the  ex- 
pansion of  the  process  of  specialization  and  coordination, 
and  the  resultant  production  of  wealth,  have  become 
phenomenal.  Yet  it  is  to  be  noted  here,  as  already  stated, 
that  the  bars  which  hem  this  expansion  of  method  from  its 
natural  limits  are  not  yet  all  down.  One  institutional  one 
of  great  force  and  rigidity  remains  unassalled.  To  dis- 
cuss the  nature  of  this  bar  is  the  office  of  later  pages;  but 
for  the  understanding  of  these  present  ones  it  is  sufficient 
to  keep  well  in  mind  this  fact. 


50  THE    COST   OF   COMPETITION 

(8)  It  is  finally  of  the  utmost  Importance  to  note  that 
when  the  conditions  exist  for  the  operation  of  the  Law  of 
Decreasing  Returns  the  arrival  of  each  additional  member 
to  the  community,  whether  by  birth  or  by  immigration, 
stands  as  a  detriment  to  the  welfare  of  those  already  there. 
Under  conditions  which  would  force  the  Law  of  Increasing 
Returns  into  operation  the  opposite  would  be  true :  each 
additional  arrival  would  ameliorate  the  lot  of  life  for  those 
already  at  work.  While  the  effect  of  any  single  case,  in  a 
community  of  appreciable  size,  would  be  invisible,  yet 
sooner  or  later  the  phenomenon  must  become  publicly  felt. 
It  will  then  find  expression  in  a  myriad  of  different  ways, 
chiefly  of  ethical  Import:  in  a  body  of  law  and  public 
opinion  antagonistic  to  and  hypercritical  of  those  appar- 
ently "  crowding  In  "  in  the  former  case,  or  a  public  atti- 
tude of  welcome  to  all  without  question  in  the  latter. 

Between  these  two  Laws:  of  Increasing  and  Decreas- 
ing Returns,  respectively,  although  In  their  opposite  ex- 
tremes they  bear  the  strongest  possible  mutual  contrast 
as  to  their  effect  upon  the  fortunes  of  mankind,  there  is 
no  sharply  visible  dividing  line.  Mathematically  the 
division  is  sharp:  values  for  the  exponent  x-\-y—i 
above  zero  proclaim  increasing,  those  below  decreasing, 
returns.  But  in  actual  life  there  Is  no  method  known  as 
yet  for  ascertaining  what  is  or  what  will  be  the  value  of 
the  exponent,  except  the  purely  empirical  one  of  cut-and- 
try  experience.  Both  variables,  x  and  y,  are  at  work  at 
once.  The  population  is  ever  increasing;  so  is  the  com- 
plexity of  all  Industry.  We  do  know,  however,  that  the 
greater  the  complexity  of  the  total  task  and  the  greater 
the  freedom  to  develop  its  possibilities  by  substituting 
scientific  methods  of  combination  and  cooperation  for  the 
old-fashioned    parallel    and    uncommunicative,    or    even 


SPECIALIZATION   AND   COORDINATION       51 

jealous,  independence,  the  greater  will  be  this  exponent 
which  measures  the  geometric  ratio  of  increase  of  individ- 
ual productivity  and  welfare  with  growth  of  population 
and  material  knowledge.  The  scientists  and  inventors 
are  caring  for  the  growth  in  physical  complexity  needed 
to  permit  a  constantly  increasing  degree  of  specialization; 
let  the  legislators  look  to  it  that  they  supply  the  requisite 
freedom  for  following  up  this  opportunity  with  a  corre- 
sponding growth  of  cooperative  coordination.  For  spe- 
cialization, without  coordination  to  a  single  undivided  end, 
is  both  useless  and  impossible. 

The  actual  operation  of  the  Law  of  Increasing  Returns 
is  so  obvious  upon  every  hand  that  it  seems  needless  to 
call  attention  to  it.  Not  only  is  every  factory,  with  its 
little  army  of  cooperative  workmen,  its  multitude  of 
departments  and  its  complex  refinement  of  organization 
an  example  of  its  truth,  but  the  entire  circle  of  factories, 
industries,  trades  and  professions,  organized,  specialized 
and  correlated  by  the  interdependence  of  the  natural 
forces  with  which  they  deal,  is  another  and  a  greater  one. 
Each  step  in  the  progress  of  modern  science  expands  in 
extent  and  develops  in  intricacy  the  net  of  mutual  attrac- 
tions between  the  erstwhile  independent  industries.  In 
fact,  the  entire  aspect  of  modern,  international  civiliza- 
tion, from  the  world-circle  as  a  maximum  down  to  those 
little  individual  groups  of  workers  wherein  subdivision  is 
impossible,  as  a  minimum,  is  nothing  but  one  vast  illustra- 
tion of  coordination  and  specialization,  with  the  resultant 
creation  of  increasing  returns  to  each  worker  with  each 
advance  in  complexity  of  differentiation.  Just  as  it  has 
developed  the  fishing-industry  from  the  primitive  hand- 
line  and  spear  to  the  modern  fleet  of  high-speed  schooners 
and  steamers,  so  has  it  brought  all  other  industry  from  the 
days  of  the  pioneer  jack-at-all-trades,  with  the  household 


52  THE    COST    OF    COMPETITION 

spinning-wheel,  loom  and  shop,  to  the  present  magnificent 
intricacy  of  organization  and  perfection  of  output.  In- 
vention is  not  what  has  done  it.  Invention  has  done 
its  share;  but  the  most  skilful  invention,  without  co- 
ordination, is  as  helpless  toward  accomplishing  it  as  is 
the  discovery  of  new  supplies  of  raw  material.  Each  of 
these  accomplishments,  in  its  every  detail,  has  lain  equally 
latent  throughout  the  ages,  awaiting  the  day  of  that 
advance  in  civilization  which  might  make  it  profitable  for 
them  to  come  forth.  Every  single  invention  has  appeared 
before  man  was  sufficiently  coordinated  properly  to  make 
use  of  it,  just  as  each  form  of  raw  material  has  been  dis- 
covered before  full  knowledge  of  its  potential  value  was 
attained.  What  both  have  waited  upon  has  been  the 
advent  of  the  political  and  Intellectual  freedom  of  man, 
his  emancipation  alike  from  oppressive  law  and  repressive 
bigotry,  to  make  possible  those  changes  In  his  methods 
which  might  develop  these-  bare  potentialities  into  profit- 
able properties. 

For  instance,  our  Amerlcaa  bridge-builders,  working  In 
India  with  native  labor,  found  that  whereas  each  Amer- 
ican workman  is  ready,  upon  need,  to  take  up  any  job  on 
the  construction,  each  native  is  prevented,  by  caste,  from 
doing  more  than  one  thing.  The  resultant  inefficiency 
may  be  Imagined.  Thus,  In  India,  is  progress  in  pro- 
ductivity chained  down  by  caste.  Here  in  America  we 
have  no  rigid  caste;  but  our  progress  In  productivity  Is 
perceptibly  hampered,  nevertheless.  We  are  shackled  by 
both  written  and  unwritten  law :  by  the  fear  which  lies  In 
nearly  every  man's  heart  to  adopt  methods  truly  coopera- 
tive, because  they  may  be  novel,  and  by  the  public  statutes 
which  embody  that  general  fear  In  the  law  of  the  land. 


IV 

EXCHANGE 

IT  has  been  pointed  out  that  the  grade  of  life  possibly 
attainable  in  the  illustrative  seashore  colony  which 
subsisted  solely  upon  fish  could  never  be  anything 
more  than  a  very  low  one.     The  reasons  were : 

(i)  The  brutal  effect  upon  the  population  of  every 
variation  in  the  natural  supply  of  raw  material :  of  inevit- 
able famine  when  fish  were  scarce,  of  no  alternative  to 
gluttony  when  they  were  plenty;  and 

(2)  The  depressing  effect  of  mere  monotony  of 
existence. 

Let  it  be  supposed,  however,  that  the  situation  is  im- 
proved by  a  treaty  of  peace  with  an  inland  tribe  of 
hunters,  who  bring  to  the  shore  game  which  they  are 
willing  to  exchange  for  fish.  The  gain  here  is  manifold 
on  both  sides.  In  the  first  place  comes  a  purely  biologi- 
cal gain,  under  the  natural  law  that  diversity  of  envi- 
ronment (in  this  case,  of  diet)  leads  to  diversity  of 
talent. 

In  the  second  place,  the  natural  irregularities  of  food- 
production  are  somewhat  smoothed  over.  When  fish  are 
scarce  game  is  apt  to  be  plenty,  and  vice  versa.  More- 
over, in  times  of  such  scarcity  of  fish  it  would  naturally 
result  that  the  difficulty  of  obtaining  the  few  fish  would 
lead  to  a  high  price  for  fish  in  terms  of  gam.e,  and  the 
few  fish  of  the  fishermen  would  bring  them  in  much  more 
nutriment,  in  the  shape  of  game,  than  if  exchange  had  been 
impossible.     The  same  is  true  of  the  hunter  in  the  case  of 

53 


54  THE    COST    OF    COMPETITION 

a  game-famine;  for  the  chances  are  doubly  against  the 
simultaneous  occurrence  of  famine  of  both  fish  and  game. 

Again,  when  fish  are  plenty,  instead  of  their  being 
wasted  by  a  population  unable,  even  in  savage  gluttony, 
to  enjoy  more  than  a  portion  of  them,  it  becomes  possible 
to  purchase  with  them  supplies  of  game  of  a  more  rare 
sort,  coming  from  distant  and  inaccessible  localities  and 
considered  as  a  luxury. 

The  biologic  response  to  this  step  in  evolution  would  be 
prompt.  The  standard  of  living  would  be  elevated,  as 
regards  both  security  and  diversity  of  life,  the  two  corner- 
stones of  civilization. 

Exchange.  Thus  is  added,  to  the  processes  already 
listed  as  together  constituting  Production,  Exchange. 
Exchange  occurs  as  a  connecting  link  between  the  several 
steps  of  specialized  production,  and  also  between  produc- 
tion and  consumption.  The  pure  process  of  exchange,  as 
the  word  will  be  strictly  used  in  these  pages,  involves  the 
two  following  activities,  and  no  others: 

( 1 )  Mutual  transfer  of  ownership  between  two  co- 
operating Producers  or  bodies  of  Productive  Labor,  or 
between  Productive  Labor  and  Consumer,  for  the  purpose 
of  mutual  benefit  in  obtaining  thereby  an  article  better 
fitted  for  consumption  by  each,  either  as  raw  material  for 
the  further  production  of  value  or  in  actual  consumption 
in  the  support  of  life;  for  these  are  the  only  sorts  of  trans- 
fer between  individuals  which  can  result  in  an  Increase  of 
Value  to  the  community; 

(2)  Accountance  or  record  of  the  above. 

The  value  of  exchange  is  to  be  expressed  In  the  same 
language  which  was  applied  to  transportation.  The  two 
are  practically  inseparable.  In  some  cases  transportation 
occurs  without  exchange  of  ownership,  as  does  also  ex- 
change without  transportation;  but  such  cases  are  In  the 


EXCHANGE  55 

minority.  Yet  the  difference  in  nature  between  transpor- 
tation and  exchange  should  be  kept  clear  and  distinct. 
Transportation  is  valuable  in  that  it  alters  the  natural  en- 
vironment of  the  commodity:  corn  surrounded  by  corn- 
fields is  of  little  value;  that  same  corn  surrounded  by  fac- 
tories or  coal-mines  becomes  of  great  value.  Exchange 
is  valuable  in  that  it  alters  the  human  environment  of  the 
commodity.  When  bread  passes  from  the  possession  of 
a  baker  to  that  of  a  shoemaker  it  gains  in  value;  but  bread 
sold  from  one  baker  to  another  is  still,  supposedly  and 
naturally,  surrounded  by  a  surplus  of  bread  and  no  gain 
in  value  ensues.^  Since  the  great  majority  of  people 
maintain  a  permanent  locality  of  residence,  transportation 
usually  means  change  of  ownership  as  well  as  change  of 
locality.  But  it  is  the  question  of  alteration  of  environ- 
ment which  establishes  the  gain  in  value  or  the  lack  of  it. 

Without  perfectly  free  exchange  between  the  several 
subdivisions  of  laborers  specialization  cannot  be  effective, 
nor  even  effected.  Its  very  existence  is  coupled  with  the 
word  coordination.  No  community  can  develop  the 
value  lying  dormant  in  its  latent  potentiality  for  specializa- 
tion and  coordination  unless  it  removes  absolutely  all 
obstacles  from  the  path  of  exchange. 

It  is  by  this  means  that  the  splendid  system  of  special- 
ization visible  in  our  modern  factory-system  has  been 
brought  about.  There  the  coordination  is  the  most  per- 
fect devisable.  No  obstruction  to  the  freest  possible  ex- 
change Is  permitted.     Not  only  do  the  pattern-shop,  the 

1  Here  is  visible  one  of  the  inconsistencies  of  the  commercial  market. 
On  'Change,  if  wheat  be  sold  to  one  already  possessing  a  surfeit  of  wheat, 
giving  him  a  "corner,"  the  price  is  increased.  There  is,  however,  no  in- 
crease in  value  to  justify  this  rise  in  price.  When  the  market  "breaks" 
and  those  possessing  a  surplus  of  wheat  begin  to  sell,  the  value  released 
to  the  community  is  obvious;  but  the  price  of  wheat,  instead  of  being 
increased  by  its  increase  in  value,  is  decreased. 


56  THE    COST    OF   COMPETITION 

foundry  and  the  machine-ship,  for  instance,  of  any  manu- 
facturing establishment  cooperate,  by  consultation,  etc., 
so  as  to  direct  their  efforts  best  to  the  common  end,  but 
the  articles  which  pass  from  one  to  the  other,  forming  the 
finished  product  of  one  department  and  the  raw  material 
of  the  next,  do  so  under  a  splendid  system  of  cooperative 
liberty.  The  pattern-shop  is  credited  with  what  patterns 
it  turns  out,  not  because  the  patterns  are  themselves  sal- 
able to  the  public,  but  because  the  foundry  needs  them. 
The  foundry  is  credited  with  the  crude  castings  which  it 
produces  because  the  machine-shop  needs  them.  Each 
department  is  charged  with  its  own  proper  expense.  The 
machine-shop  is  charged  with  the  castings  received  as  raw 
material  and  is  credited  with  the  finished  product;  which, 
it  may  be  supposed,  is  the  first  step  in  the  combined  opera- 
tions which  results  in  an  article  salable  on  the  open  market 
or  consumable  in  the  economic  sense. 

Herein  the  value  of  exchange  without  transportation  is 
purely  that  it  makes  possible  specialization.  The  iron- 
establishment  works  under  such  a  system  at  a  much  greater 
efficiency  than  it  would  if  each  man  tried  to  make  his  own 
patterns,  form  his  own  mold,  pour  it  and  then  machine 
his  castings  himself,  in  turn.  Such  methods  have  been  fol- 
lowed. They  formed,  in  the  beginning,  the  foundation  of 
our  country's  economic  greatness.  But  they  are  now  out- 
grown, antiquated  and  fearfully  inefficient  in  comparison 
with  modern  ones. 

The  Central  Office.  The  device  which  effects  this 
exchange  with  such  perfect  smoothness  and  justice  is  the 
Central  Office.  Everything  produced  by  any  of  the  de- 
partments belongs,  nominally,  to  it.  The  value  produced, 
as  was  stated  before,  really  and  obviously  belongs  to  the 
individual  workers  who  produced  it;  but  it  is  found  that 
the  only  way  to  conserve  to  them  this  value,  in  the  face  of 


EXCHANGE  57 

the  complexity  of  modern  industry  and  trade,  is  for  the 
ownership  of  all  commodities  In  the  shop  to  be  legally 
vested  In  the  Central  Office;  which  guarantees,  In  effect, 
to  return  to  each  individual  the  value  which  he  has  pro- 
duced. 

The  Central  Office  of  course  cannot  accomplish  this 
service  without  cost,  and  must  charge  for  it.  The  value 
which  each  individual  produces  is  taxed  to  a  certain  pro- 
portion, which  tax  is  retained  In  the  Office  to  maintain  its 
expenses.  The  remainder,  which  is  really  the  value 
actually  produced  by  the  workman.  If  the  transaction  has 
been  equitably  conducted.  Is  returned  to  him  under  the 
name  of  wages:  his  real  productivity  being  his  apparent 
productivity  minus  the  tax  for  cost  of  exchange.  Because 
the  privilege  of  exchange  much  enhances  his  apparent  pro- 
ductivity, his  wages,  or  his  real  productivity,  amounts  to 
more,  even  when  thus  taxed  therefor,  than  they  would 
without  the  privilege  of  exchange.  Therefore,  since 
exchange  produces  value,  by  absorbing  raw  material  in  the 
way  of  ledgers  and  Ink,  and  labor  in  the  form  of  clerks, 
aiding  production  by  widening  coordinate  specialization, 
this  Central  Office  is  properly  to  be  classed  as  one  of  the 
specialized  departments  of  productive  labor.  If  so,  it 
would  be  under  the  name  of  Accountance,  as  a  part  of 
Superintendence.  But  such  classification,  as  was  noted  on 
page  26,  can  Include  only  shop-order,  shop-cost,  stock-list 
or  similar  accountance.  That  Is,  the  Central  Office  of  the 
Factory  Proper,  engaged  in  supervising  exchanges  within 
the  producing  organization  alone,  must  be  kept  distinct 
from  the  Central  Office  of  the  Business,  which  is  engaged 
In  supervising  and  promoting  exchanges  with  the  outside 
world, — although  they  often  occupy  the  same  room  and 
absorb  portions  of  the  efforts  of  the  same  individuals. 

It  is  next  to  be  noticed  that  into  the  activities  of  this 


58  THE    COST    OF    COMPETITION 

entire  productive  organization  no  individual  legal  owner- 
ship enters.  Not  a  man  in  the  factory,  from  doughboy 
to  superintendent,  legally  or  nominally  owns  a  bit  of  the 
work  which  he  is  striving  to  perfect  or  the  tools  with  which 
he  works.  Every  one  of  them  receives  his  income  in  the 
form  of  wages.  He  works  absolutely  without  any  sense 
of  proprietorship.  He  knows  no  "  mine  "  or  "  thine  " 
until  payday  arrives  at  the  end  of  the  week.  Then,  and 
not  before,  he  is  free  to  enjoy,  as  his  own,  the  value  which 
he  has  actually  produced  by  his  past  efforts  and  which  now 
lies,  inseparably  amalgamated  with  that  of  a  thousand 
other  cooperative  workmen,  dissolved  and  invisible  within 
the  fruit  of  their  common  toil. 

This  absence  of  legal  ownership  or  of  sense  of  personal 
possession  applies  to  almost  every  step  in  the  entire  modern 
productive  system.  Each  man  works  for  wages,  not  for 
the  sake  of  making  things  for  his  own  gratification.  Here 
and  there  is  a  small  factory  which  is  superintended,  more 
or  less,  by  its  owner;  there  are  even  still  some  where  work- 
man and  proprietor  are  identical;  but  they  are  small  in 
size,  unimportant  in  number  and  character  when  compared 
with  the  more  fully  developed  productive  enterprises,  and 
they  are  on  the  steady  decrease.  They  are  comparatively 
unprofitable.  They  belong  to  a  past  age  and  are  slowly 
but  steadily  falling  into  disuse,  to  give  place  to  their  now 
adult  offspring,  who  do  the  bulk  of  the  world's  work  and 
give  to  modern  industrial  society  its  characteristic  ear- 
marks: the  factories  devoid  of  personal  ownership. 

For  in  the  truly  modern  affair  the  owners  are  completely 
absented  from  the  productive  processes.  They  neither 
know  nor  care  what  is  going  on,  except  as  it  is  visible  in 
the  results.  They  hire  an  able  superintendent,  pay  him 
several  thousand  a  year  of  wages,  and  expect  him  to  prove 
that  the  value  he  produces  is  greater  than  that.     If  he 


EXCHANGE  59 

does  not,  he  either  receives  less  in  the  future  or  else  he 
changes  his  occupation. 

Even  in  those  cases  where  the  owner  is  present  and 
spends  a  portion  of  his  time  in  superintending  the  produc- 
tive processes  of  his  mill  (as  contrasted  with  the  commer- 
cial processes  of  his  selling-office),  this  distinction  must 
ever  be  kept  clear:  That  during  that  portion  of  his  time 
he  is  a  superintendent,  and  not  an  owner.  The  portion 
of  his  Income  which  is  creditable  to  this  portion  of  his 
time,  equal  to  the  value  produced  by  that  portion  of  his 
services,  should  be  charged  against  the  enterprise  and 
credited  to  him  as  a  salary  for  superintendence.  In 
economic  parlance  it  would  be  know^n  as  wages.  The 
remainder  of  his  income,  usually  the  far  greater  portion, 
is  to  be  credited  to  him  on  the  score  of  ownership  of 
capital  or  for  business  management,  to  be  classified  prop- 
erly later  in  the  analysis.  The  one  set  of  persons,  too, 
to  whom  the  message  of  this  analysis  is  both  specially 
addressed  and  especially  important,  are  these  same  manu- 
facturers and  business-men  of  duplex  activities. 


Classification  by  Activities,  Not  by  Individuals 

Therefore,  in  considering  the  limits  of  the  system  prop- 
erly to  be  defined  as  the  Productive  Organization, 
throughout  all  of  which  exchange  is  effected  in  the  free 
and  cooperative  manner  already  described,  they  should 
never  be  expected  to  be  found  coincident  with  the  limits 
demarking  certain  classes  of  people.  They  coincide,  on 
the  other  hand,  with  the  limits  demarking  certain  classes 
of  action.  As  a  great  many,  though  not  the  majority  of, 
individuals  divide  their  time  between  several  quite  dis- 
tinct sorts  of  activities,  they  thereby  find  themselves  prop- 


6o  THE    COST   OF   COMPETITION 

erly  classified,  at  one  hour  or  another,  in  as  many  quite 
distinct  departments  of  economic  society.  Just  as,  in 
other  walks  of  life,  a  man  may  be,  at  different  times  within 
a  year  or  a  week,  a  Sunday-school  superintendent  and  a 
thief,  or  a  philanthropist  and  a  careless  distributer  of 
typhoid-germs  throughout  his  community,  so,  in  the 
economic  fields  of  action,  a  man  may  within  a  single  hour 
compass  activities  so  opposite  in  their  effect  upon  the  com- 
munity as  to  constitute  him  a  veritable  Dr.  Jekyl  and  Mr. 
Hyde.  He  may,  and  often  does,  occupy  himself  at  one 
hour  with  work  the  unconscious  undoing  of  which  absorbs 
his  next;  and  yet  he  and  the  public,  looking  too  closely 
only  at  what  is  visible  in  him,  the  individual,  and  his 
immediate  task,  may  be  quite  unconscious  of  the  change 
and  of  the  contrast.  Indeed,  it  is  the  main  underlying 
object  of  this  analysis  to  draw  the  mind  of  the  reader,  for 
awhile,  away  from  the  habitual  plan  of  marking  distinc- 
tions so  uniformly  between  contrasting  classes  of  persons 
and  to  substitute  therefor,  as  the  only  safe  guide  in  eco- 
nomic thought  and  action,  the  habit  of  drawing  all  fun- 
damental distinctions  between  contrasting  classes  of 
activity. 

For  this  purpose  it  is  worth  while  to  spend  a  little  time 
upon  an  illustrative  case. 

Let  it  be  supposed  that  an  industrious  and  upright 
dairyman  is  careless  as  to  the  cleanliness  of  his  cows,  his 
farm  and  his  neighbors.  Indeed,  we  may  even  suppose 
him  to  be  of  marked  cleanliness  of  disposition,  keeping 
his  milk-cans  well  scoured  and  his  farm-buildings  neatly 
painted;  yet  let  it  be  supposed,  at  the  same  time,  that  he 
is  ignorant  and  bigoted  in  his  mental  attitudes,  that  he 
refuses  to  read  even  the  most  popular  treatises  upon  the 
biology  o'f  disease-propagation  and  snorts  in  disgust  at 
what  he  calls  the  modern   fads  of  the  scientific  health- 


EXCHANGE  6i 

boards.  It  Is  quite  imaginable,  indeed,  it  is  a  common 
fact,  that  such  a  man  may  become  at  once  a  distributer  of 
rich,  attractive  milk  and  of  typhoid-germs.  In  the  former 
capacity  he  is  a  producer  of  value  and  a  public  benefactor; 
in  the  latter  he  is  a  destroyer  of  human  life  and  an  enemy 
of  mankind. 

These  two  activities,  of  natures  the  most  contrasted,  he 
maintains  simultaneously.  Of  the  excellence  of  the  one 
he  is  justly,  often  intensely,  proud.  Of  the  very  existence 
of  the  other  he  is  unconscious.  He  is  a  malefactor  upon 
a  tremendous  scale,  not  from  evil  disposition,  nor  from 
hasty  temper  in  the  face  of  provocation,  nor  from  inherited 
weakness  in  the  face  of  temptation,  but  from  simple  crass 
ignorance  of  the  true  nature  of  his  everyday  acts.  If 
detected  and  arrested  in  his  career  by  the  keen  eye  of 
science  and  the  strong  arm  of  the  law,  his  most  natural 
feeling  is  one  of  injustice  and  of  righteous  indignation. 
Yet  it  is  none  the  less  true  that  the  very  existence  of  human 
society  demands  his  suppression,  not  as  an  immoral  indi- 
vidual nor  as  a  producer  and  distributer  of  milk,  but  as 
a  producer  and  distributer  of  death  by  typhoid.  The 
only  thing  which  will  possibly  accomplish  this  suppression 
is  his  education;  and  since  he  has  rejected  all  opportuni- 
ties for  voluntary  education  by  more  comfortable  means, 
imprisonment  or  fine  is  imposed  by  force  as  the  only  known 
means  of  teaching  him  his  lesson. 

It  is  particularly  to  be  noted  that  the  evil  of  the 
original  situation  excludes,  on  the  part  of  the  guilty  indi- 
vidual, all  question 

(a)  Of  morality  or  immorality  of  impulse, 

(b)  Of  individual  consciousness  or  unconsciousness 
of  guilt,  or 

(c)  Of  public  condemnation  or  approval  of  his  acts; 
that  is,  the  distribution  of  typhoid-germs  was  just  as  fatal 


62  THE   COST   OF   COMPETITION 

before  the  health-boards  discovered  it  and  aroused  public 
law  and  sentiment  against  it  as  it  was  afterwards.  Such 
was  the  unalterable,  natural  fact. 

It  is  quite  proper  to  introduce  at  this  point  the  idea 
that  the  factories,  offices  and  individuals  of  our  industrial 
organization  cover  daily  activities  which,  when  closely 
examined,  prove  to  be  a  composite  of  two  or  more  very 
different  sorts.  Some  of  these  activities  are  of  the  very 
greatest  value  to  the  community.  Some  are  fraught  with 
disease  and  death  for  the  society  and  the  individual.  In 
the  separation  and  the  classification  of  these  activities  it  is 
worse  than  useless  to  attempt  either  to  sort  out  the  indi- 
viduals themselves,  or  their  good  or  bad  motives,  or  their 
good  or  bad  consciences,  or  the  approval  or  disapproval 
of  the  public.  It  is  safe  and  sane  only  to  look  to  the 
nature  of  the  moment's  action  and  to  the  natural  fact  of 
its  inevitable  result.  Should  the  conclusions  which  are 
forced  upon  us  by  such  a  method  of  analysis  prove  to  be 
in  wide  disagreement  with  current  public  opinion,  no  more 
mysterious  explanation  is  needed  than  the  presence  of 
widespread  public  ignorance  of  cause  and  effect  in  the 
field  of  economic  energies.  The  very  hopeful  sequel  to 
these  conclusions  is  that  nothing  more  difficult  of  attain- 
ment is  needed,  in  remedy,  than  education.  The  vastly 
more  difficult  task  of  widespread  moral  regeneration  is 
eliminated. 

Pure  Exchange  and  Exchange  Alloyed  with 
Barter.  At  this  point  In  the  analytical  observation  of 
modern  productive  methods  is  reached  a  contrast  so 
marked  as  to  be,  in  the  nature  of  affairs,  exceedingly  sur- 
prising were  It  not  that  past  history  explains  Its  origin. 
It  appears  that  the  absolute  freedom  and  perfection  of 
the  system  of  exchange  which  has  just  been  described  as 


EXCHANGE  63 

characterizing  the  modem  factory,  and  which  has  per- 
mitted that  growth  of  specialization  from  which  all 
modern  opulence  is  sprung,  is  not  in  universal,  nor  even 
in  major,  adoption  for  all  exchange.  Exchange  within 
the  factory  is  universally  carried  on  thus  perfectly,  it  is 
true;  but  exchange  without,  usually  from  one  factory  to 
another,  and  always  between  factory  and  consumer,  is 
carried  on  upon  a  totally  different,  indeed  upon  a  quite 
opposite  plan.  Whereas  within  the  factory  occurs  ex- 
change pure  and  simple:  the  interchange  between  two 
parties  of  the  possession  of  an  article  for  the  sake  of  the 
addition  of  further  value  to  it,  in  this  second  plan  occurs 
exchange  coupled  issith  barter.  In  the  first  case  the  sole 
motive  is  the  Value  naturally  inherent  in  Exchange  (p. 
56)  ;  in  the  second  this  motive  becomes  quite  secondary. 

The  first  step  in  defining  to  the  understanding  these  two 
methods  of  exchange  so  as  to  fully  grasp  their  opposite 
characteristics  would  seem  to  be  to  draw  the  line  demark- 
ing  the  two  fields  of  their  respective  activities.  But  in 
attempting  this  some  difficulty  arises.  It  seems  impossible 
to  classify  their  territories  of  adoption  according  to  any 
distinguishing  characteristic,  without  or  within.  There 
does  not  appear  to  be  any  broad  difference,  either  in  time, 
place  or  manner  of  surrounding  conditions,  which  deter- 
mines which  of  the  two  should  be  used  in  any  given  case. 

For  instance,  geographical  distance  of  separation  has 
nothing  to  do  with  it.  Factories  located  in  the  most  dis- 
tant states  sometimes  exchange  upon  the  free,  coopera- 
tive plan,  thus  constituting  themselves  separate  depart- 
ments of  a  single  enterprise;  while  factories  existing  side 
by  side  often  rely  upon  exchange  coupled  with  barter  for 
the  mutual  intercourse  whereby  they  cooperate  in  the  final 
supply  to  the  Consumer.  Upon  the  other  hand,  both 
statements  may  be  directly  reversed  and  still  be  in  truth. 


64  THE    COST    OF    COMPETITION 

Again,  size  has  nothing  to  do  with  it.  Some  of  the 
largest  factories  cooperate  with  others  equally  large, 
though  most  of  the  large  ones  rely  upon  communication 
through  the  medium  of  barter.  On  the  other  hand,  the 
size  of  the  aggregations  of  labor  which  are  commonly 
found  cooperating  in  exchange  without  barter  may  range 
downwards  to  a  single  man  each. 

Once  more,  character  of  work  has  nothing  to  do  with 
it:  tasks  both  very  similar  and  very  dissimilar  exchange 
on  either  plan.  Coal-mines  or  oil-refineries  with  rail- 
roads, street-railways  with  police-departments,  coastwise 
navigation  with  inland  copper-mining,  illuminating-gas 
with  federal  legislation :  these  most  opposite  and  irrele- 
vant services  all  meet,  in  certain  instances,  in  this  freely 
cooperative  spirit.  In  other  cases,  services  of  the  most 
intimately  related  and  interdependent  character,  such  as 
the  mail,  the  telegraph,  the  telephone  and  the  railroad  serv- 
ices, gas-making  and  the  supply  of  electrical  power,  heat 
and  light  in  cities,  etc.,  not  only  do  not  exchange  freely 
and  cooperatively,  but  they  refuse  to  try  to  do  so,  even 
when  the  obvious  advantages  to  the  community  latent  in 
the  proposition  are  portrayed  to  them;  and  in  this  refusal 
they  are  frequently  upheld  alike  by  public  opinion  and  by 
the  law. 

When  attention  is  turned  to  the  question  of  singleness 
of  ownership  of  the  tools  utilized  as  a  factor  in  deter- 
mining where  barter  shall  be  added  to  exchange  and  where 
not,  there  is  temporary  promise  of  a  clew  to  an  explana- 
tion; but  it  melts  upon  examination.  Many  of  the  larger 
enterprises  owned  by  a  single  legal  individual  exchange 
under  barter;  or  at  least  they  assert  to  the  public,  in  the 
most  indubitable  terms,  that  they  do.  Enterprises  owned 
by  separate  individuals,  on  the  other  hand,  by  men  of  the 
most  distant  interests  and  characteristics,  are  found  upon 


EXCHANGE  65 

examination,  or  by  accident,  to  be  exchanging  coopera- 
tively, under  the  methods  known  as  pools,  agreements, 
mergers,  etc.  There  is  no  basis  for  accurate  or  satisfac- 
tory distinction  between  the  two  plans  by  reference  to 
singleness  of  legal  ownership. 

Wherever  the  line  may  actually  be  drawn, — and  it  can 
never  be  drawn  in  the  same  place  upon  two  successive 
days, — certain  it  is  that  nothing  determines  it  except  the 
unwritten  law  of  changeable  public  sentiment  or  the 
changeable  written  law  of  the  statute-book.  There  is  no 
rational  nor  natural  nor  absolute  support  back  of  the 
vacillating  distinctions  which  are  drawn  between  the  use 
of  the  two  methods.  Enterprises,  services  and  individ- 
uals which  one  week  conduct  themselves  with  the  bit- 
terest mutual  antagonism  are  found  to  be,  on  the  follow- 
ing week,  warmly  cooperating.  Individuals  will  trans- 
pose their  mental  attitude  toward  the  two  methods,  from 
the  most  vigorous  prosecution  of  barter  to  the  most  cor- 
dial support  of  cooperative  exchange,  or  vice  versa,  in  a 
day.  A  change  of  employment,  or  the  sale  of  a  mill  or  a 
business,  will  so  metamorphose  them. 

Wherefore  must  the  searcher  after  accurate  knowledge 
end  this  quest  with  the  statement  that  the  distinction 
drawn  between  these  two  widely  contrasted  methods  is 
entirely  haphazard  in  character:  that  it  is  not  founded 
upon  any  principle,  either  geographical,  mechanical, 
economic  or  religious.  In  the  progress  of  events  from  the 
primitive  past  from  which  barter  has  been  inherited  it  has 
happened,  in  the  different  lands,  that  different  industries 
and  different  individuals  have  been  first  in  being  freed  from 
its  burden  and  left  free  to  carry  on  their  exchanges  in  the 
natural  fashion.  The  others  are  still  addicted  to  barter 
by  habit  or  custom,  or  are  compelled  to  it  by  law.  Thus, 
in  England  it  has  been  customary,  at  least  to  within  a  few 


66  THE    COST    OF    COMPETITION 

years,  for  the  gas-makers  to  exchange  with  the  community 
of  consumers  of  gas  upon  the  free,  cooperative  plan,  while 
the  water-providers  exchanged  by  barter.  In  America 
it  is  just  the  opposite:  the  water-service  is  usually  operated 
cooperatively,  while  nearly  all  of  the  gas-suppliers  barter 
with  the  community. 

For  barter  is  not  exchange.  It  is  a  process  quite  addi- 
tional to  exchange.  While  It  is  commonly  referred  to  as 
a  method  of  effecting  exchange,  it  will  readily  appear,  upon 
thought,  that  the  pure  method  of  effecting  exchange  is 
always  present,  even  when  barter  is  superimposed.  The 
commodities  change  owners,  using  the  term  owners  to 
include  full  temporary  control  for  the  purpose  of  addi- 
tion of  value  by  further  transformation;  full  account  of 
the  transaction  is  kept,  by  labor  allotted  to  that  task. 
That  is  the  entire  jurisdiction  of  Exchange.  The  process 
and  its  purpose  is  completed  thereby.  Every  possible 
enhancement  of  Value  of  a  commodity  which  can  result 
from  a  change  of  hands,  whether  to  the  extent  of  mere 
temporary  control  or  of  permanent  legal  ownership,  has 
been  thus  accomplished. 

On  the  other  hand,  both  the  process  of  barter  and  the 
objects  which  induce  its  undertaking  are  quite  distinct  from 
and  additional  to  the  above.  It  is  altogether  in  the  form 
of  an  appendage,  wholly  external  to  the  productive  pro- 
cesses of  transformation,  transportation  and  exchange, 
that  barter  is  superimposed  upon  this  last.  So  true  is  this 
that  in  most  of  the  modern  industrial  enterprises  exchange 
is  carried  on  by  one  set  of  individuals:  the  shop-superin- 
tendents, order-clerks,  shipping-clerks,  stock-clerks,  etc., 
all  salaried  or  wage-paid  individuals,  while  the  barter  is 
carried  on  by  a  quite  distinct  organization:  of  owners, 
officials,  salesmen,  commercial  travelers  and  advertising- 
agents,  with  their  assistants,  the  stenographers,  printers, 


EXCHANGE  67 

etc.  But  whether  this  separate  organization  exists  or  not, 
the  activities  are  none  the  less  separate  and  distinct,  even 
opposite,  in  their  nature  and  in  their  effects.  Indeed,  the 
effects  of  the  two  sorts  of  activities  are  much  more 
strongly  contrasted  than  possibly  can  be  the  personal 
characteristics  of  the  tvvo  sets  of  people,  even  when  sep- 
arate. The  task  of  bringing  clearly  before  the  reader  this 
fundamental  contrast  must  be  reserved  to  the  following 
chapter  upon  Barter.  Before  turning  to  it,  however,  it 
will  be  well  to  review  and  summarize  what  has  already 
been  established. 

Summary.  The  word  Production,  now  capable  of 
being  given  a  more  detailed  significance,  will  be  used  here- 
after to  cover  broadly  the  processes  and  the  organization 
now  completely  outlined  as  consisting  of: 

( 1 )  The  Transformation  of  material  more  or  less 
raw  into  some  other  form  of  greater  value  for  consump- 
tion by  and  the  support  of  human  life; 

(2)  Its  Transformation,  either  between  persons  en- 
gaged in  the  above  processes  or  between  the  last  one  in 
their  series  and  the  actual  Consumer,  who  absorbs  and 
destroys  the  article  in  support  of  his  life  or  growth; 

(3)  Its  Exchange  between  any  of  the  parties  listed  in 
the  t\vo  previous  paragraphs. 

The  table  displayed  upon  page  28  may  be  taken  as  the 
amplification  of  any  one  of  these  three  paragraphs,  or  of 
all  three  combined. 

This  definition  Includes  all  superintendence  and  all 
accountance  necessarily  incidental  to  the  processes  defined. 
It  excludes,  on  the  other  hand, 

{a)  All  transportation  which  does  not  enhance  the 
consumptive  value  of  the  article  transported  by  altering 
its  natural  environment  to  one  more  favorable  to  con- 
sumption ; 


68  THE    COST    OF    COMPETITION 

(b)  All  superintendence  not  engaged  In  directing  the 
actual  handling,  transforming  and  transporting  of  the 
goods,  or  engaged  in  unnecessary,  valueless  transportation 
or  transformation;  and 

(c)  All  accountance  accessory  to  such  unproductive 
effort. 

This  is  Production.  This  alone  produces  what  we  Con- 
sume. All  other  activities  of  the  body  economic  are 
external  thereto.  Their  definition  and  discussion,  in  the 
chapters  which  are  to  follow,  will  much  augment,  by  light 
from  the  opposite  side,  the  clarity  of  the  definition  which 
has  thus  been  finally  accomplished.  But  it  is  the  object 
of  the  chapters  preliminary  to  this  point  to  make  clear  to 
the  reader  that  this  is  indeed  Production,  the  only  set  of 
processes  possibly  to  be  defined  by  that  name;  that,  as  thus 
defined,  absolutely  every  iota  of  value  now  existent,  every 
material  particle  capable  of  supporting  human  life  or 
growth,  is  now  actually  produced,  completely,  from  the 
original  mines,  fields,  forests  and  sea  to  the  time  and  place 
of  actual  consumption  in  the  support  or  elevation  of  human 
life,  by  these  processes  thus  listed  under  the  name  of  Pro- 
duction, AND  BY  NONE  OTHERS. 


V 
BARTER 

THE  office  of  barter,  as  an  accessory  to  exchange, 
is  the  determination  of  the  Valuation  to  be  as- 
signed to  the  Values  exchanged. 
Valuation,  it  will  be  remembered,  is  the  psychic  atti- 
tude of  an  Individual  toward  a  given  Value.  Whereas 
value  is  a  natural  fact,  measurable  in  terms  of  the  life 
springing  from  it,  valuation  is  a  quite  independent  vari- 
able, sometimes  greater  and  sometimes  smaller  than  the 
value  with  which  it  is  associated.  Whereas  the  biologic 
equilibrium  of  life,  dependent  as  it  is  upon  the  value 
which  supports  it,  always  brings  us  back,  sooner  or  later, 
more  or  less  closely,  to  a  truer  estimation  of  values,  yet 
temporarily  such  estimation  or  valuation  may  wander  far 
astray  from  the  truth. 

The  plan  at  present  relied  upon  for  its  determination 
and  limitation  is  Barter.  Not  that  we  know  of  no  other 
way.  Vast  volumes  of  exchange  are  carried  on,  con- 
tinuously and  stably,  without  any  aid  from  barter  what- 
ever. The  central  office  of  a  factory,  for  instance,  seldom 
has  any  difficulty  in  determining  the  valuations  needed 
when  the  foundry  exchanges  with  the  machine-shop;  yet 
these  valuations  are  true  and  natural,  not  artificial  ones, 
determined  solely  by  volume  and  intensity  of  supply  and 
demand.  Although  not  equal  to,  they  are  closely  and 
accurately  proportional  to,  the  true  values.  Very  little, 
if   any,    labor-difficulty   based   upon    internecine   jealousy 

69 


70  THE    COST    OF    COMPETITION 

over  such  valuations  is  reported.  Yet  no  barter  between 
the  two  departments  party  to  the  exchange  occurs.  The 
foundry  does  not  appoint  an  agent  who  shall  bargain  for 
its  workmen  with  the  agent  of  the  pattern-shop  and  the 
agent  of  the  machine-shop  over  the  price  at  which  rough 
castings  shall  be  entered  against  finished  ones  in  the  books 
of  the  central  office,  or  over  the  price  at  which  molders' 
time  shall  be  charged  as  compared  with  machinists'  time; 
nor  do  the  inevitable  accessories  of  such  a  policy:  the 
advertising,  the  drummers,  the  restriction  of  output,  the 
retention  of  legal  counsel,  etc.,  etc.,  characterize  the  rela- 
tions between  the  several  departments.  Such  a  policy 
would  not  for  one  instant  be  permitted  by  the  factory- 
manager.  As  a  gross  interference  with  the  efficiency  of 
production,  the  parties  attempting  it  would  be  immediately 
excused  from  all  further  participation  in  the  service  and 
the  pay.  The  internal  reciprocations  of  the  factory,  in 
its  present  standard  form,  consist  of  pure  and  simple 
economic  exchange,  and  not  the  slightest  difficulty  in  keep- 
ing it  so  arises  from  the  frailties  of  human  nature.  In 
outside  transactions  barter  exists,  in  fact,  solely  because 
it  was  used  in  the  remote  and  barbarous  past  and  because 
we  have  not  yet  finished  with  its  abolition.  Every  step 
in  the  growth  of  that  factory-system  which  has  so  indelibly 
characterized  the  history  of  the  past  two  .centuries  has 
consisted  of  the  gradual  elimination  of  barter  from 
exchange  during  specialized  production.  Indeed,  the 
phenomenal  expansion  of  productivity  and  reduction  of 
productive  costs  during  the  past  century  Is  due  much  more 
to  this  process  than  to  any  advance  in  purely  technical 
methods  and  devices.  The  process  of  its  elimination  is 
merely  not  yet  finished.  If  its  elimination  from  exchange 
between  producer  and  consumer  and  between  capitalist 
and  laborer  had  been  equally  steady,  rapid  and  thorough. 


BARTER  71 

there  is  little  chance  that  this  book  would  ever  have  needed 
to  be  written. 

Barter  is  best  defined  by  illustration,  and  for  this  pur- 
pose the  exchanging  communities  of  fishermen  and 
hunters  will  serve  excellently  well.  In  order  to  make  the 
simile  as  close  as  possible  to  the  probably  historical  order 
of  events,  let  it  be  supposed  that  the  tribes  of  fishermen 
and  hunters  originally  existed  in  a  state  of  perpetual 
savage  warfare.  This  would  narrowly  limit  the  activities 
of  both  parties,  both  geographically  and  as  to  liberty  for 
specialization.  Those  living  on  the  shore  would  find  their 
food  in  the  sea ;  nor  could  they  search  for  a  wider  diet  for 
fear  of  the  warlike  hunters  of  the  hills.  Those  living 
inland  subsisted  upon  game  or  upon  their  flocks,  never 
thinking  of  communication  with  other  tribes  except  for 
the  sake  of  plunder  or  rapine.  The  result  would  be  in 
each  case  a  narrow  limitation  of  the  possibilities  of  life, 
•practically  as  narrow  as  if  no  other  tribe  existed. 

Under  these  conditions  exchange  would  enter  as  one  of 
the  rewards  of  peace.  Barter,  or  the  exchange  between 
individuals  upon  a  basis  of  price  to  be  settled  solely  by 
themselves,  demands,  as  a  preessentlal  to  its  existence, 
comparative  physical  peace  between  the  negotiating  par- 
ties, amounting  to  a  truce,  at  least.  Lacking  this,  it  ceases 
to  be  barter  and  becomes  robbery.  But  the  difference 
between  the  two  lies  in  this  alone,  and  not  at  all  in  the 
question  of  moderation  or  exorbitance  of  price  exacted. 

But  economically  speaking,  peace  would  constitute 
merely  an  amalgamation  of  the  two  tribes  into  a  single 
community,  scattered  geographically  and  divided  politi- 
cally, to  be  sure,  but  one  in  their  common  interests  in  the 
securing  of  diversified  wealth.  So  far  as  economics  is 
concerned,  the  segregation  of  the  separate  services  or 
industries   might   consist   of   their   allotment   to   separate 


72  THE    COST    OF    COMPETITION 

tribes,  or  merely  to  separate  trades  in  a  single  tribe.  Politi- 
cally the  difference  might  be  great;  economically  it  would 
be  nil. 

Under  such  peaceful  conditions,  therefore,  when  game 
is  brought  to  the  seashore  or  fish  to  the  hills  for  the  pur- 
poses of  exchange  there  arises  immediately  a  question  as 
to  price.  The  true  value  of  the  goods  submitted  is 
unknown.  The  savage  intellect  has  acquired  no  biolog- 
ical laboratories,  nor  statistical  bureaus  for  its  determina- 
tion. So  would  be  brought  into  play,  in  their  stead, 
barter  as  to  valuatiofi. 

Here,  again,  would  trouble  arise.  The  community  of 
savages  has  no  means  for  determining  even  the  average 
valuation  of  the  goods  by  the  community;  it  does  not 
possess  sufficiently  intelligent  organization  to  perceive 
things  as  a  unit.  It  has,  in  short,  no  Central  Office. 
Therefore  is  recourse  necessarily  taken,  purely  as  a  matter 
of  primitive  ignorance,  to  individual  valuation  as  a  deter- 
minant of  price,  and  the  exchange  is  made  upon  that  basis. 
The  parties  are  left  strictly  to  themselves.  Interference 
in  their  little  duello  of  bargaining-abilities  is  held  to  be  as 
dishonorable  and  reprehensible  as  is  interference  in  any 
other  sort  of  duello. 

Thus  arose  the  "  free  social  contract."  As  civilization 
advanced  it  has  been  found  necessary  to  interfere,  to  the 
extent  of  prohibition,  with  every  other  sort  of  duello. 
With  barter  the  interference  has  as  yet  been  only  partial. 

The  price  thus  determined  upon  would  not,  of  course, 
be  coincident  with  the  valuation  of  the  goods  by  either 
party  to  the  exchange.  It  would  be  in  the  nature  of  a 
mean  between  the  two.  When  the  price  were  determined 
as  the  result  of  merely  a  single  negotiation,  between  two 
parties  only,  it  possesses  no  outside  effectiveness.  When 
it  was  the  result,  more  or  less  indirectly,  of  a  large  number 


BARTER  73 

of  such  negotiations  it  would  become  a  market-price. 
These  considerations  lead  to  the  following  definitions : 

Price  is  the  nearest  available  measure  of  individual 
valuation.  Market-price  is  the  similar  measure  of 
average  valuation.  Prices  paid  by  individuals  may 
depart  considerably  from  the  market-price. 

Price  is  not  an  exact  measure  of  valuation  because  the 
valuation  may  exceed  the  price  paid,  or  be  less  than  the 
price  accepted,  by  a  considerable  proportion  without  being 
evident  in  any  alteration  of  the  visible  price  from  the  mar- 
ket standard.  In  fact,  the  primary  requisite  for  exchange 
is  that  the  purchaser's  valuation  of  the  article  must  exceed 
the  price  asked  before  purchase  can  be  made;  the  seller's 
valuation  must  be  less  than  the  price  offered  before  a  sale 
can  be  effected.  It  is  difference  in  valuation  which  over- 
comes the  natural  resistance  to  exchange,  just  as  differ- 
ence in  head  overcomes  the  resistance  to  flow  of  water  or 
difference  in  temperature  the  resistance  to  flow  of  heat. 

Price  is  merely  a  mean  ratio  of  the  two  valuations  of 
the  two  respective  commodities  on  the  part  of  the  two 
parties  to  the  exchange :  the  number  of  fish  which  shall  be 
exchanged  for  a  haunch  of  venison,  for  instance,  or  vice 
versa.  When  price  is  stated  in  terms  of  money  it 
expresses  the  relation  of  the  valuation  of  each  article  in 
question  to  that  of  another  commodity,  usually  gold, 
which  is  chosen  as  a  standard  of  reference.  We  thus  have 
no  absolute  measure  of  valuation. 

Barter.  It  is  clear  that  the  price  obtained  in  exchange 
coupled  with  barter,  for  each  commodity  respectively  in 
terms  of  the  other,  for  game  in  terms  of  fish  or  for  fish 
In  terms  of  game,  depends  upon  the  balance  of  power 
between  two  pairs  of  factors,  one  pair  on  each  of  the  two 
sides  of  the  bargain: 


74  THE    COST    OF   COMPETITION 

( 1 )  Between  the  individual  productivities  of  the  two 
parties  to  the  bargain;  that  is,  the  amount  of  game  or  fish 
brought  to  market  by  each  laborer  as  the  result  of  a  given 
amount  of  labor.  The  equation  between  these  two  forces 
results  in  the  natural  price,  or  the  equation  of  pure  value. 

In  such  an  isolated  case  as  a  single  bargain,  irrespec- 
tive of  market  averages,  the  value  might  not  properly  be 
called  pure.  It  would  have  to  be  assumed  that  the  rela- 
tion between  productivity  and  cost  of  supporting  life  is 
the  same  in  these  individuals  as  in  the  average  of  the  com- 
munity. The  only  thing  necessary  to  make  the  statement 
true,  therefore,  is  to  expand  the  factors  resting  upon 
individual  productivity  into  others  resting  upon  the 
average  productivity  of  the  community.  This  is  the  pro- 
cess relied  upon  in  all  the  cooperative  exchanges  between 
the  various  departments  which  enter  Into  the  modern  fac- 
tory-system; they  are  all  based  upon  the  natural  price  of 
the  work  done  in  the  several  departments,  each  in  terms 
of  the  others. 

(2)  Between  the  comparative  abilities  of  the  two  par- 
ties, respectively,  to  force  the  price  accepted  by  the  other 
azvay  from  this  natural  price,  by  driving  a  good  bargain. 
It  is  this  equation  of  forces  which  alone  constitutes  barter. 

The  natural  price  is  the  result  of  perfectly  free 
exchange,  under  a  peaceful  and  equitable  equation  of  the 
comparative  productivities  and  the  comparative  values. 
Such  exchange  permits  specialization  and  coordination 
and  is  productive  of  value.  It  and  Its  p.rlce  are  therefore 
legitimate  and  essential  features  of  a  modern  system  of 
production. 

The  barter-price,  on  the  other  hand,  is  the  result  of  the 
modification  of  free  exchange  by  barter,  by  forces  quite 
aside  from  those  determining  the  natural  price.  Their 
nature  and  their  fruits  belong  quite  outside  the  field  of 


BARTER  75 

production,  which  is  complete  in  the  combination  of  labor 
with  free  exchange,  and  are  to  be  determined  only  by 
more  extended  investigation. 

The  process  of  barter  Is  properly  divisible  into  two 
subdivisions: 

(a)  The  alteration,  by  one  of  the  two  parties  to  the 
exchange,  of  the  other's  valuation  of  his  own  portion  of 
value  offered  in  market,  by  persuasion  or  by  deception  as 
to  the  natural  price;  in  which  case  the  victim  is  unconscious 
of  the  wrong  being  perpetrated  upon  him  In  the  diversion 
of  the  price  away  from  the  true  and  natural  one. 

(b)  The  forcing,  by  the  one,  of  the  price  accepted 
by  the  other  away  from  the  latter's  valuation  of  his  goods 
and  toward  his  own  valuation,  either  by  utilizing  an 
environment  which  places  the  other  under  the  duress  of  a 
painful  alternative  if  he  refuses  to  exchange,  or  by 
coercion  through  fear  of  the  same,  even  though  it  be  not 
imminent;  In  which  case  the  victim  Is  conscious,  but  help- 
less, either  from  his  own  weakness  or  from  the  disadvan- 
tages of  his  environment. 

As  stated  above,  the  natural  price  of  an  article  Is  a 
function  of  comparative  individual  productivities  and  can 
be  affected  only  by  the  education  of  the  producer,  by  the 
discovery  of  new  supplies  of  raw  material  or  by  the  Inven- 
tion of  new  machines  or  methods  of  production.  It  Is 
toward  these  goals  that  all  education,  all  science  and  all 
invention  are  directed.  But  as  they  affect  equally.  In  the 
end,  almost  all  commodities  produced,  and  all  individuals 
composing  the  laboring  body,  they  naturally  have  little 
effect  upon  the  natural  price,  even  temporarily.  Now  and 
then  some  exceptional  step  in  advance  places  one  com- 
modity or  another,  some  worker  or  another,  temporarily 
in  advantage.  But  as  the  higher  price  of  the  commodi- 
ties, or  the  lower  price  of  the  labor  thus  left  temporarily 


76  THE    COST    OF    COMPETITION 

in  the  rear  offers  an  exceptional  inducement  to  them  to 
ameliorate  their  condition,  to  which  they  must  sooner  or 
later  respond,  there  results  the  following  inevitable  law  of 
equilibrium: 

Neither  improvements  in  the  arts  or  sciences  nor  any 
advance  in  the  average  of  general  or  technical  intelligence 
of  labor  tends  to  permanently  alter  the  natural  price  of 
exchange  between  any  two  staple  commodities,  or  between 
any  two  staple  classes  of  productive  labor. 

New  commodities,  of  course,  are  continually  entering 
the  field,  through  discovery  or  invention.  They  enter 
fairly  gradually,  and  while  they  are  doing  so  this  law  will 
obviously  not  apply.  But  once  the  novelty  of  their  manu- 
facture is  gone  and  they  are  fully  established  as  staple 
products  of  the  community,  the  above  holds  true  of  them. 

In  order  to  correctly  understand  barter,  further  analysis 
of  its  detail  is  necessary.  Let  it  be  supposed,  for  illustra- 
tion, that  a  single  hunter  should  meet  a  single  fishei"man, 
each  laden  with  the  fruits  of  his  trade  and  each  anxious 
to  exchange  a  portion  of  it  with  the  other,  in  order  to 
obtain  a  greater  diversity  of  diet.  Their  trysting-place, 
whether  by  the  shore  or  inland,  is  the  market.  To  it  is 
brought  fish  and  game,  cleaned  and  ready  for  the  spit. 
Production,  including  transportation,  is  already  complete. 
Except  for  the  final  transportation  to  the  family-table,  or 
the  savage  substitute  therefor,  each  commodity  is  ready 
for  final  consumption  in  the  support  of  life;  and  this,  it 
will  be  supposed  for  the  present,  is  the  sole  object  of  the 
exchange,  as  it  was  of  the  productive  effort  preliminary 
thereto.  Except  for  the  difi^culty  as  to  the  unknown  corn- 
parative  valuation,  or  price,  there  is  no  reason  why  each 
should  not  pick  up  his  proper  share  of  the  other's  things 
and  return  home.      If  so,   no  effort,   either  muscular  or 


nervous,  would  have  been  expended  in  any  other  way 
than  in  production,  including  the  necessary  transportation. 
To  adjust  this  matter  of  valuation,  however, — as  a 
method  of  solution  of  a  purely  intellectual  question, — 
enters  barter. 

In  this  process  each  party  sees  promptly  his  opportunity 
to  increase  his  wealth  otherwise  than  by  producing  it. 
To  illustrate,  let  it  be  supposed  that,  in  the  then  existing 
stage  of  existence,  a  day's  labor  on  the  part  of  the  average 
savage  would  secure  ten  hares,  or  thirty  fish,  and  that 
either  of  these  same  quantities  of  food  would  support  for 
one  day  the  average  family  of  such  a  size  as  would,  in  the 
long  run,  keep  the  population  stationary.  It  is  only  under 
stationary  conditions  of  growth  of  all  sorts,  in  wealth  and 
refinement  as  well  as  in  population,  that  an  average  day's 
labor  produces  only  an  average  day's  consumption.  For 
simplicity's  sake  it  is  now  to  be  supposed  that  such  Is  the 
case.  But  whether  this  be  so  or  not,  values  produced  are 
always  to  be  measured  by  their  power  to  support  life  as 
they  are  consumed,  and  not  by  the  amount  of  life  absorbed 
in  producing  them.^  Therefore,  the  natural  price  of  one 
hare  Is  three  fish,  because  it  is  in  that  propor-tlon  that  they 
will  equally  support  the  savage  race. 

1  Herein  lies  the  error  of  the  economic  philosophy  of  Marx.  He  takes 
the  day's  labor  as  the  fundamental  unit  of  measurement,  disregarding  the 
question  as  to  whether  that  effort  be  wisely  or  unwisely  directed,  toward  or 
away  from  the  best  needs  of  the  community.  By  accepting  the  life-sup- 
porting power  as  the  basic  measure  of  value  this  error  is  avoided.  Just 
what  sort  of  life  is  to  be  considered  the  most  valuable, — for  there  are,  of 
course,  many  sorts,  requiring  as  many  different  grades  of  supplies  for  their 
maintenance, — is  not  a  question  of  economics  at  all,  but  of  ethics.  These 
questions  must  be  settled  entirely  outside  the  field  of  economics,  by  the 
standards  of  taste,  religion  and  philosophy  which  prevail  at  the  time. 
Once  thus  settled  and  incorporated  into  public  opinion,  it  is  the  business 
of  economics  to  supply  life's  material  needs.  The  extent  to  which  it  per- 
forms this  task  is  the  standard  to  which  all  measurements  within  its 
borders  must  be  referred. 


78  THE    COST    OF    COMPETITION 

If  the  savage  community  had  had  sufficient  intelligence 
and  patriotism  to  establish,  by  mere  statistical  record,  the 
natural  price  between  fish  and  hares,  and  to  publish  this 
fact  from  day  to  day  or  month  to  month,  enforcing  it  as 
we  now  enforce  fixed  street-car  fares,  hack-fares,  postal 
charges  and  tax-rates,  all  would  have  been  simple.  But  it 
did  not.  Therefore,  the  question  as  to  how  many  fish  the 
hunter  was  to  get  for  each  hare,  or  how  many  hares  the 
fisherman  was  to  carry  home  as  the  result  of  his  day's  fish- 
ing, remained  wide  open. 

This  fundamental  fact  is  to  be  noted  at  the  start,  to  be 
reiterated  and  emphasized  at  every  possible  point:  Pro- 
duction was  already  finished  and  could  not  be  extended  by 
any  sort  of  further  effort.  There  lay  the  game  and  the 
fish  on  the  market.  No  further  effort  could  or  did  pre- 
tend to  increase  their  number,  their  weight  or  their  life- 
supporting  value  in  any  way.  Each  man  possessed  at  the 
start  an  equal  amount  of  nutriment  in  his  stock  of  pro- 
visions. By  exchanging  half  of  it  for  half  of  the  other 
fellow's,  each  would  still  have  the  same  amount  of  nutri- 
ment, capable  of  supporting  the  same  amount  of  animal 
life;  only,  by  its  twofold  diversity,  it  would  then  be  able 
to  support  a  higher  quality  of  life  than  before.  But  this 
gain  is  accomplished  by  Exchange  pure  and  simple.  Bar- 
ter, coming  additionally  to  this  process,  aims  at  a  quite 
different  sort  of  gain. 

For  the  total  quantity  of  life-supporting  nutriment 
owned  by  the  two  parties  cannot  be,  and  is  not  honestly 
pretended  to  be,  altered  by  barter.  It  is  the  proportion- 
ate distribution  of  wealth  between  the  two  parties  alone 
which  barter  aims  to  influence  and  to  modify.  For,  as  the 
result  of  exchange  alone,  at  the  natural  price,  each  man 
would  depart  from  market  with  five  hares  and  fifteen  fish. 
But  in  barter  each  sees  his  opportunity,  as  stated  before, 


BARTER  79 

to  secure  wealth  without  producing  it;  the  only  way,  of 
course,  being  to  get  away  from  the  other  fellow  some  of 
the  wealth  which  the  latter  has  produced.  If  the  hunter, 
for  instance,  by  persuasion  or  deception  as  to  the  quality 
of  either  of  the  commodities  or  as  to  their  natural  price, 
or  by  securing  a  time  for  exchange  when  the  fisherman  is 
in  especial  need  of  game,  or  by  selecting  a  place  where 
violence  may  be  threatened  without  danger  of  punish- 
ment by  the  tribe,  or  by  the  promise  of  influence  with  a 
sweetheart,  a  chieftain  or  an  enemy, — if  by  any  such 
means  he  can  force  his  neighbor  to  accept  one  hare  for 
four  fish  instead  of  one  for  three,  then,  as  the  result  of 
the  barter,  the  hunter  will  depart  from  market  with  five 
hares  and  twenty  fish  and  the  fisherman  will  return  home 
with  five  hares  and  only  ten  fish, — to  what  domestic  fate 
we  may  leave  to  the  imagination. 

As  the  net  result  of  the  day's  efforts,  therefore,  the 
hunter  has  produced  five  hares  and  fifteen  fish  by  produc- 
tive effort  (hunting,  transportation  and  exchange)  and 
has  also  acquired  five  fish  by  barter;  the  fisherman  has 
produced  five  hares  and  fifteen  fish  by  productive  effort 
(fishing,  transportation  and  exchange)  and  has  lost  five 
fish  by  barter. 

Price-tendency  under  Barter.  Herein  arises  the 
second  important  characteristic  of  the  situation:  If  the 
fisherman  finds  life  more  endurable  upon  a  daily  diet  of 
five  hares  and  ten  fish  than  he  did  upon  thirty  fish  alone, 
he  will  return  to  the  market  on  the  morrow,  to  be  again 
outdone  by  the  hunter  at  barter;  if  not,  he  will  remain 
away  until  the  hunter  becomes  more  moderate  in  his 
demands.  If,  on  the  other  hand,  life  would  be  more 
enjoyable  for  the  fisherman  even  upon  so  low  a  diet  as 
five  hares  and  only  five  fish  than  it  would  upon  thirty  fish 
alone,  and  if  the  limits  of  either  the  hunter's  seductive  or 


8o  THE    COST    OF    COMPETITION 

overbearing  disposition  or  of  his  command  of  Intrigue 
have  not  yet  been  reached,  these  processes  will  most 
naturally  be  expanded  until  the  hunter's  daily  income  has 
become  five  hares  and  twenty-five  fish,  while  the  fisher- 
man's is  reduced  to  five  hares  and  five  fish.  For  this  Is  the 
line  of  least  resistance.  It  Is  easier  and,  to  dispositions 
fitted  for  It,  pleasanter  to  barter  than  to  produce.  To 
produce  means  efi^ort  sustained  over  a  period  proportional 
to  the  value  acquired.  To  bargain  successfully  Is  to  main- 
tain the  proper  attitude  for  a  few  minutes  only;  the  effort 
being  not  at  all  proportional  to  the  reward,  whether  five 
fish  or  ten,  but  to  the  difference  between  the  comparative 
personalities  and  advantages  of  the  two  contending 
parties. 

From  these  considerations  is  established  this  law : 
Barter  added  to  Exchange  inevitably  tends  to  directly 
reduce  the  income  of  the  loser  to  the  minimum  which 
leaves  life  at  all  preferable  to  the  more  primitive  level  of 
existence  without  exchange. 

Barter  a  Negative  of  Productivity.  Such  would  be 
the  intercourse  between  hunter  and  fisherman  If  the 
latter  were  a  quiet,  unaggressive  individual,  devoted  to 
his  day's  work  and  knowing  little  and  caring  less  about 
diplomacy.  Intrigue  or  antagonism — as,  most  fortunately. 
Is  true  of  the  majority  of  mankind.  But  let  it  be  sup- 
posed, on  the  other  hand,  that  the  fisherman  who  greeted 
the  hunter  turned  out  to  be  one  of  his  own  Ilk,  matching 
him  evenly  In  ability  to  barter.  Then  would  result  two 
things: 

( 1 )  Each  would  return  home,  on  the  average,  after 
all  their  dickering,  with  the  five  hares  and  fifteen  fish 
which  each  would  have  had  had  they  exchanged  without 
any  barter  at  all:  that  Is,  at  the  natural  price. 

(2)  The  natural  hope  of  being  able  to  effect  a  better 


BARTER  8i 

result  than  this,  legitimately  supported  by  the  very  high 
reward  allotted  to  barter,  per  unit  of  time,  when  it  is  suc- 
cessful at  all,  would  lead  to  their  spending  more  and  more 
time  each  day  at  bargaining  with  each  other,  until  the 
time  devoted  to  production  became  so  restricted  that  the 
quantities  of  fish  and  game  brought  to  market  no  longer 
tempted  quarrel  over  them.  This  hope  of  quicker  and 
easier  success  by  barter  than  by  production  is  the  gambler's 
hope.     It  is  seen  to  bring  the  gambler's  reward. 

From  this  second  consideration  arises  the  law:  Barter 
added  to  Exchange  inevitably  tends  to  restrict  the  pro- 
ductivity of  both  parties  to  the  barter  to  the  minimum 
which  leaves  existence  at  all  preferable  to  the  more  primi- 
tive level  attainable  without  exchange. 
Barter  a  Parasite.  Combining  these  two  laws,  there 
results  this  all-important  conclusion:  Barter  is  a  pro- 
cess parasitical  upon  Exchange  so  destructive  to  the 
latter  and,  with  it,  to  the  Production  dependent  upon 
exchange,  and  to  the  Life  engaged  in  both  and  dependent 
upon  them  for  support,  that  it  limits  their  existence  and 
activity  to  the  minimum  which  will  afford  a  supporting 
food-supply  to  the  barter  which  preys  upon  them.  This 
minimum  is  slightly  greater  than  the  productivity  possible 
zvithout  either  exchange  or  barter,  but  is  vastly  less  than 
that  possible  with  pure  exchange  alone. 

That  is  to  say,  given  a  certain  field  for  exchange,  a 
field  of  value-production  potential  for  a  certain  degree 
of  expansion  by  the  advent  of  exchange,  and  the  presence 
of  barter  entering  with  the  exchange  will  permit  the  latter 
to  enter  and  to  grow  only  to  that  degree  which  barely 
constitutes  progress  at  all  (else  would  no  entrance  take 
place)  and  which  leaves  the  maximum  portion  of  the 
latent  potentiality  for  growth-support  absorbed  by  unpro- 
ductive effort  at  barter. 


82  THE   COST   OF   COMPETITION 

Barter  an  Evil  in  Two  Distinct  Directions.      In 

these  fundamental  characteristics  of  barter  which  have 
just  been  noted  there  lie  visible  in  embryo  two  very  dis- 
tinct wrongs,  both  of  which  are  inherent  in  the  nature  of 
the  institution.  Both  of  these  must  inevitably  rise  and 
grow,  under  political  and  geographic  freedom,  to  the 
greatest  extent  tolerable  by  society,  wherever  prices  are 
largely  left  open  to  settlement  by  individuals,  independently 
of  natural  law  and  public  responsibility.     These  two  are: 

(a)  The  wrong  done  the  individual  less  capable  as  a 
barterer  (although  capable  as  a  producer  to  any  imagin- 
able degree)  by  the  extraction  from  him,  by  force  of  will 
or  circumstance,  of  a  portion  of  what  he  has  already 
produced; 

(b)  The  wrong  done  to  the  community,  in  the  consump- 
tion of  time  and  nervous  energy  in  useless,  because  non- 
productive, barter  and  visible  in  the  decreased  supply  and 
the  enhanced  market-price  of  the  commodity  in  question. 

The  first  of  these  is  plainly  visible  in  the  elementary 
illustration.  In  modern  times  it  has  very  greatly  increased 
in  magnitude,  by  the  exaggeration  of  the  unbalance 
between  the  contending  parties  far  beyond  what  it  could 
be  between  any  two  individuals,  by  the  combination  of 
individuals  on  the  selling  side  with  no  corresponding  com- 
bination on  the  buying  side  against  it.  It  is  this  which  is 
the  foundation  of  all  of  the  current  outcry  against  "  the 
trusts."  But  in  this  the  wrong  has  grown  only  in  magni- 
tude, not  in  character. 

The  second  of  these  two  wrongs  is  by  no  means  so 
easily  discernible.  In  the  elementary  illustration  it  is 
obscure  partly  because  of  the  deliberately  assumed  lack  of 
any  coherent  social  entity  which  might  be  palpably 
wronged  by  the  mere  existence  of  the  barter,  and  partly 
because  of  the  obvious  freedom  of  other  individuals,  in 


BARTER  83 

so  elastic  an  environment  as  this  elementary  society,  to 
operate  quite  independently  of  the  haggling  pair.  In 
modern  society  both  of  these  conditions  are  absent. 
Society  is  a  unit,  whether  it  will  own  up  to  it  or  not;  the 
institutions  adopted  by  the  majority,  which  never  sees 
clearly  what  it  is  doing,  must  be  accepted  by  the  minority. 
In  its  modern  development,  however,  this  second  form  of 
wrong  is  still  obscure,  not  because  it  is  small  or  unimpor- 
tant but  because  of  the  blinding  intricacy  of  the  field  in 
which  it  is  active. 

Yet  is  it  most  important  to  call  attention  at  this  point 
to  the  fact  that  It  is  this  second  form  of  offense  involved 
in  barter,  the  one  against  society  at  large,  which  now  con- 
stitutes by  far  its  most  important  phase.  It  has  not  only 
grown  enormously  in  magnitude,  but  its  ramifications 
have  worked  their  insidious  way  throughout  the  social 
structure  until  the  entire  fabric  of  individuals  and  institu- 
tions, material,  intellectual  and  moral,  has  been  permeated 
and  distorted  by  its  poisonous  presence.  The  victim 
suffers,  as  does  one  with  gout  or  leprosy,  knowing  only 
the  pain  but  not  the  cause.  So  complc'X  is  the  medium 
through  which  this  offense  is  committed,  so  multiplex  is 
the  community-victim  itself  which  suffers  from  it,  that  it 
will  take  the  remainder  of  these  pages  to  properly  identify 
the  crime  and  Indict  the  offending  institution.  Yet  is  it 
important  to  state  here  most  emphatically  that  it  Is  not 
the  direct  crime  of  violence  operative  against  the  individ- 
ual, in  barter,  which  causes  the  most  suffering;  It  is  the 
crime  of  passive  error  operative  against  the  community 
which  makes  to-day  the  problem  of  the  future  existence 
of  society  an  appalling  one.  It  Is  not  the  profit-making, 
the  profit  which  Is  extorted  from  the  consumer,  which 
does  him  the  most  harm;  It  is  the  profit-seeking,  the  time 
spent  by  the  barterer  In  antagonism  and  failure,   which 


84  IHE    COST   OF   COMPETITION 

undermines  his  neighbor's  purchasing-power  and  which 
robs  the  rich  and  the  poor  alike  of  their  natural  heritage 
in  a  new  continent:  material  welfare,  peace  on  earth  and 
good  will  to  men.  It  is  not  gold,  but  the  legalized  strife 
for  gold,  which  is  the  root  of  all  evil. 

In  spite  of  the  wide  contrast  in  superficial  appearance 
between  our  simple  illustrative  case  of  the  hunter  and  the 
fisherman,  offered  to  aid  in  the  clear  definition  of  the 
terms  used,  and  the  complexities  of  modern  industry,  it  Is 
to  be  especially  urged  that  it  supplies  complete  proof  for 
these  propositions  In  their  utmost  application.  The  dif- 
ference is  solely  one  of  degree,  not  of  kind.  It  cannot, 
however,  furnish  a  complete  understanding  of  their 
breadth  and  depth.  That  will  finally  be  found  In  the 
corroborative  way  in  which  every  more  complex  appear- 
ance of  these  processes  in  actual  economics  develops  these 
same  resultant  symptoms.  Of  these  symptoms  the  fol- 
lowing pages  will  present  what  are  possible  within  the 
purposed  scope  of  this  work.  But  to  the  thorough 
student  the  real  proofs  are  to  be  found  In  the  myriad  of 
Items  of  news  of  current  economic  life  which  reach  us 
through  the  medium  of  the  daily  and  weekly  press,  as 
well  as  in  the  various  statistical  reports  of  the  scientific 
and  governmental  bodies.  Interpreted  in  terms  of  these 
simple  illustrations  they  will  be  found  to  be  Identical  with 
them,  except  that  they  are  become  very  much  more  com- 
plex and  intricate  In  form  by  the  Interlacing  with  them 
of  the  many  extraneous  factors  of  life  which  have  here 
been  properly  eliminated  and  by  the  mere  multiplication 
of  individual  parts. 

Internal  Barter.  Before  going  any  further  into  the 
detailed  characteristics  of  barter  there  must  be  identi- 
fied to  the  reader  another  sort  of  barter,  not  commonly 


BARTER  85 

known  by  that  name  nor  superficially  resembling  this  first 
form,  but  which  is  nevertheless  quite  identical  with  it  in 
the  nature  of  its  efforts,  of  its  reaction  upon  the  individuals 
exerting  it  and  of  its  results  to  the  community.  Thus 
far  has  been  considered  the  phenomena  arising  from 
barter  within  merely  a  single  pair  of  individuals,  members 
from  each  tribe  or  trade  respectively.  The  situation  now 
needs  expansion  until  each  tribe  shall  enter  into  the  pro- 
cess in  its  entirety. 

Let  it  be  imagined  that  the  community  of  fishers  have 
been  for  a  long  time  without  meat.  Fish  are  plenty,  but 
no  game  is  to  be  had.  Finally  there  appears  upon  the 
scene  a  hunter  with  a  hare  upon  his  back,  willing  to  trade 
for  fish.  As  the  hare  will  not  cover  more  than  one  table, 
there  arises  immediately  the  question:  Who  amongst 
the  fishermen  shall  have  the  privilege  of  exchange? 

For  the  purposes  of  illustration,  It  will  be  assumed  that 
the  hunter  is  a  close-mouthed  fellow,  who  holds  himself 
silently  aloof  from  negotiation  until  the  rabble  of  con- 
tending fishermen  shall  have  settled  this  question  among 
them.  For  the  time,  therefore,  his  personality  does  not 
enter  the  question.  It  Is  also  to  be  assumed  that  the  desire 
for  game  Is  equally  Intense  on  the  part  of  all  the  fisher- 
men. But  this  is  assumed  for  simplicity's  sake  only;  dif- 
ference between  the  fishermen  in  taste  for  game  would  not 
affect  the  situation  except  to  confine  the  final  competition 
for  the  privilege  of  exchange  to  a  portion,  Instead  of  to 
all,  of  the  fishermen. 

Into  the  settlement  of  this  question,  Who  among  them 
Is  to  have  the  privilege?  the  two  factors  already  mentioned 
will  enter: 

( I )  The  comparative  productivity  of  each  individual 
fisherman;  that  Is  to  say,  which  one  can  display  the  largest 
pile  of  fish  as  the  result  of  the  day's  labor. 


86  THE    COST    OF    COMPETITION 

(2)  The  comparative  skill  of  the  several  fishermen  in 
attracting  the  attention  of  the  hunter  and  in  persuading  or 
deceiving  him  into  the  belief  that  this  one's  fish  are  better 
and  his  neighbor's  are  worse;  or  in  driving  his  neighbors 
by  threats  Into  the  background, — thus  decreasing  the  pro- 
duction of  fish,  so  far  as  visibility  in  that  market  is  con- 
cerned; or,  it  might  possibly  be,  in  skill  and  judgment  in 
offering  a  good  price  for  the  hare  to-day  in  the  certainty 
that  by  the  morrow  it  could  be  re-sold  to  present  competi- 
tors for  a  better  price  than  they  were  now  willing  to  give. 

This  wrangle  among  the  fishermen  must  be  imagined 
as  completely  settled  before  the  hunter  comes  into  con- 
sideration at  all.  The  question  being  settled  amongst 
them  is  not:  What  price  shall  we  get  for  our  fish?  but: 
Who  among  us  is  to  have  the  privilege  of  exchange  with 
the  hunter  at  all?  This  privilege  stands  to  the  struggle 
between  the  several  fishermen  exactly  as  the  extra  five  or 
ten  fish  to  be  had  by  barter  did  to  the  struggle  between 
the  single  fisherman  and  the  hunter.  There  is  oppor- 
tunity for  only  one  to  exchange.  If  one  gets  It  the  others 
must  lose  it.  The  struggle  does  not  in  any  way  hope  to 
Increase  the  opportunity  for  exchange,  which  amounts  to 
one  hare,  no  more,  no  less.  It  does  not  aim  at  determin- 
ing the  rightful  owner  of  the  privilege;  that  would  be 
properly  settled  by  record  of  the  fish  brought  to  market 
each  day  by  each  Individual:  the  natural  price  of  that 
individual,  so  to  speak,  In  the  face  of  the  coveted  privilege 
of  exchange.  It  is  purely  a  struggle  initiated  by  the  most 
selfish  to  reserve  this  privilege  each  to  himself,  by  Its  re- 
moval away  from  the  Individual  excelling  In  productive 
skill  or  energy,  whose  natural  price  for  the  privilege  would 
be  the  highest,  to  the  individual  who  excels  in  ability  to 
barter. 

In  the  case  of  each  sort  of  barter:  that  between  the 


BARTER  87 

solitary  hunter  and  fisherman  and  that  among  the  several 
fishermen,  the  question  raised  and  settled  is  one  of  identity 
of  ownership,  not  of  total  quantity  of  goods.  It  is  one 
of  specific  or  relative  valuation,  not  one  of  absolute  value. 
If  there  be  more  of  value  on  one  side  of  the  parley  than 
there  were  in  the  first  place,  as  the  result  of  skill  in  barter, 
there  will  be  less  on  the  other. 

The    Double    Nature     of    Commercial    Success. 

Success  in  either  sort  of  contest  may  be  forwarded  by 
superiority  in  either  one  of  two  fields:  in  production  or  in 
bargaining.  In  the  first  field  will  arise  a  natural,  whole- 
some desire  on  the  part  of  each  healthy  worker  to  surpass 
his  fellows:  selfish,  if  you  please,  but  nevertheless  con- 
ducive to  greater  wealth  in  the  community  and  to  greater 
health  and  wealth  for  the  individual.  In  the  second  field 
will  also  naturally  arise  a  similar  desire  for  personal 
superiority;  but  that  it  is  unwholesome  for  both  individual 
and  community  in  its  results  and  quite  in  contrast  to  the 
first  it  is  the  task  of  these  following  pages  to  demonstrate. 
This  desire,  evinced  in  the  field  of  production,  we  shall 
call  emulation.  That  in  the  second  field  we  shall  call 
either  barter  or  bargaining  or  competition,  almost  synony- 
mously. So  far  as  all  economic  and  ethical  characteristics 
and  results  are  concerned  the  latter  three  terms  are  exactly 
synonymous;  the  laws  stated  in  terms  of  one  are  equally 
true  of  the  other.  The  only  distinction  to  be  made  in  any 
event  is  a  minor  one  of  form,  as  already  brought  out.  But 
as  a  single  term  is  much  needed  which  shall  serve  to  cover, 
in  blanket-fashion,  all  effort  of  this  character  within  the 
community,  this  minor  distinction  of  form  will  be 
neglected  and  the  term  competition  will  be  used  to  include 
all  three,  and  as  contrasted  with  emulation.  Indeed,  one 
of  the  prime  objects  in  so  doing  is  to  bring  home  to  the 
reader  the  clear  impression  that  all  activity  of  this  nature. 


88  THE    COST    OF    COMPETITION 

no  matter  in  what  walk  of  life  it  may  occur,  or  with  what 
tools  or  aims,  or  whether  with  consciousness  of  its  evil 
fruits  or  otherwise,  carries  with  it  inevitably  the  concomit- 
ants and  results  here  to  be  broadly  ascribed  to  it. 

In  the  case  of  both  emulation  and  competition  the  in- 
stinctive individual  impulse  to  surpass  and  succeed  is 
natural.  Physiologically  they  are  identical.  The  economic 
results  of  the  two,  however,  are  as  opposite  as  the 
antipodes. 

Because  these  words  emulation  and  competition  have 
never  before  been  contrasted,  to  the  author's  knowledge, 
nor  used  with  any  technical  significance  equally  exact  with 
that  assigned  to  them  here,  and  because  it  is  the  prime 
object  of  this  entire  volume  to  draw  out  their  contrast  and 
significance,  a  separate  chapter  will  be  devoted  to  their 
definition  and  discussion. 


VI 

EMULATION    AND    COMPETITION 

THE  word  competition,  as  defined  by  the  diction- 
aries, is  practically  synonymous  with  the  words 
emulation  and  rivalry.  The  modern  use  of  the 
word,  however,  in  its  commercial  connections,  has  come 
to  have  so  widely  different,  so  distinct,  so  very  antithetical, 
a  meaning  from  these  former  synonyms  that  it  seems  need- 
ful to  write  this  book  to  call  attention  to  the  fact.  For 
the  purposes  of  this  volume,  therefore,  the  two  main  ideas 
which  we  have  already  begun  to  contrast,  in  their  economic 
aspect,  under  the  terms  Production,  on  the  one  hand,  and 
Barter  or  Bargaining,  on  the  other,  will  be  considered  in 
further  distinction,  in  their  ethical  aspect,  under  the  names 
of  Emulation  and  Competition.^ 

Emulation.  Every  activity  of  man  calls  for  a  cor- 
responding psychic  impulse,  to  stand  sponsor  as  its  cause. 
In  the  case  of  activity  directed  toward  the  production  of 
value,  this  impulse  may  be  any  one,  or  all  together,  of 
three  quite  distinct  ones.  In  the  first  place  may  come 
desire,  the  relation  between  the  man  and  the  thing  which 
he  hopes  to  enjoy,  when  produced,  in  consumption.  In 
the  second  place  may  come  initiative,  the  wholly  self-con- 
tained and  instinctive  impulse  which  arises  within  the 
individual  from  a  surplus  of  muscular,  mental  or  nervous 
energy.     In  the  third  place  comes  emulation,  the  impulse 

1  The    word    rivalry    is    excluded,    as    possessing    romantic    associations 
which  unfit  it  for  the  cold-blooded  work  of  economic  analysis. 


90  THE    COST    OF    COMPETITION 

which  depends  solely  upon  the  individual's  association  with 
other  individuals  engaged  in  the  same  line  of  work.  Since 
this  discussion  concerns  only  questions  of  the  economic 
relations  existing  between  man  and  man,  cognizance  will 
be  taken  here  only  of  the  last-named  impulse,  emulation, 
and  in  these  pages  it  will  be  understood  as  meaning  only 
that  personal  pride  in,  and  the  strife  for,  comparative 
success  over  one's  fellows  which  arises  within  the  individual 
who  finds  himself  one  among  a  company  all  of  which  is 
active  in  the  field  of  Production. 

Competition.  Since  production,  as  has  just  been 
stated,  may  be  the  result  of  any  one,  or  all,  of  these  three 
psychic  impulses,  it  is  ne<:essary  to  have  one  term  for  the 
particular  impulse  in  which  we  are  interested  and  another 
for  the  economic  activity  common  to  all  three.  In  the 
case  of  activity  in  barter,  however,  there  can  be  only  one 
sort  of  causative  impulse,  and  that  one  is  based  upon  the 
relations  existing  between  the  individual  and  his  fellows. 
It  is  quite  possible  to  imagine  a  man  as  undertaking  Pro- 
duction, from  either  desire  or  initiative,  when  competely 
isolated  from  all  other  men.  It  is  impossible,  however, 
to  imagine  him  as  undertaking  Barter  except  as  a  form  of 
relationship  toward  another  individual.  There  is  there- 
fore no  need  to  distinguish  between  the  psychic  impulse 
and  the  resultant  activity.  The  word  competition  will 
be  used  to  denote  either  the  actual  activity  in  the  field  of 
barter, — that  is,  in  effort  aimed  at  the  transfer  of  value 
ALREADY  PRODUCED  frovi  one  Ownership  to  another,  by 
any  other  means  than  illegal  violence, — or  the  spirit  which 
lies  back  of  it. 

To  go  still  further  back  into  biological  processes,  the 
original  psychic  impulse  which  leads  the  individual  to 
assume  the  competitive  attitude  may  be,  under  existing 
laws  and  conditions,  any  one  of  quite  a  number.      It  may 


EMULATION   AND   COMPETITION  91 

be  envy,  greed  or  wanton  vindictiveness,  upon  the  one 
hand,  or  the  most  natural  and  wholesome  Impulses  of  self- 
preservation,  acting  under  necessity,  upon  the  other.  Like 
the  dealer  in  impure  milk,  the  conscience  of  the  competing 
individual  may  cov^er  any  degree  of  consciousness  of  guilt, 
from  the  most  brutal  disregard  of  other  persons'  welfare 
to  the  most  thoughtless  acquiescence  in  an  existing  state  of 
affairs  which  there  is  no  apparent  reason  or  way  to  alter. 
With  all  of  this,  economic  discussion  has  no  concern. 
That  is  the  business  of  the  moralist.  But  when  any  one 
of  these  impulses  has  led  the  individual  to  assume  the 
competitive  economic  attitude  toward  his  fellows  there  is 
necessarily  present  a  corresponding  competitive  psychic 
attitude  which,  as  a  matter  of  relations  between  men,  it  is 
proper  to  recognize  and  name.  And  since,  whatever  may 
have  been  the  original  impulse,  the  result  to  the  outside 
community,  as  in  the  case  of  the  ignorant  dairyman,  is 
equally  destructive,  one  name  will  suffice  to  cover  the 
entire  phenomenon.  To  both  the  psychic  attitude  and  the 
economic  activity,  therefore,  is  assigned  the  name  com- 
petition. The  word  will  be  understood  to  cover  impar- 
tially the  dicker  over  the  price  of  exchange  between  sepa- 
rate goods  or  trades,  or  over  the  price  of  labor,  and  the 
strife  between  individuals  over  questions  of  privilege  of  ex- 
change; it  must  consequently  include  also  all  questions  of 
legal  ownership  of  goods  or  privileges. 

Emulation  and  Competition  Compared.  As  already 
pointed  out,  production  may  or  may  not  be  conducted 
in  a  spirit  of  emulation,  or  of  personal  pride,  either 
arrogant  or  charitable,  in  one's  superiority  over  one's 
neighbor.  Undoubtedly  the  best  grade  of  productivity  is 
developed  by  its  presence.  Nevertheless,  both  initiative 
and  desire  furnish  good  seconds.  But  barter,  on  the  other 
hand,   cannot  possibly  be   conducted  without   a   sense   of 


92  THE    COST    OF    COMPETITION 

relationship  toward  one's  fellows;  and  even  a  cursory 
examination  will  reveal  the  fact  that  the  competitive  rela- 
tionship is  not  and  cannot  be  a  pleasant  or  a  wholesome  or 
an  unselfish,  Christian  one,  whatever  may  be  the  nature  of 
its  results.  It  is,  in  its  very  essence,  an  egotistical,  over- 
bearing thing,  conceivable  with  the  doer  only  in  relation 
to  the  overcoming  of  other  people.  Whereas  a  great  deal 
of  very  useful  production  is  carried  on  solely  for  the  love 
of  the  work  done,  with  almost  entire  unconsciousness  of 
what  anyone  else  is  doing  in  similar  lines,  with  objective 
consciousness  only  of  the  raw  material  in  hand,  competi- 
tion, on  the  other  hand,  from  its  very  nature,  can  be  objec- 
tively conscious  only  of  other  individuals:  those  whom  it 
seeks  to  contravene.  What  the  emulator  gains  by  his 
striving  no  one  else  l.oses;  it  comes  from  the  unending 
bounty  of  nature.  But  what  the  competitor  gains  can 
possibly  come  only  from  his  opponent's  loss.  With  com- 
petition, therefore,  in  order  to  completely  describe  its 
nature,  there  must  be  added  the  idea  of  an  aggressive 
desire  and  attempt  at  circumvention,  frustration  and  annul- 
ment of  the  other's  efforts  and  enjoyment  which  is  quite 
foreign  to  emulation.  " 

Only  in  the  most  unnatural  individuals  is  the  natural, 
wholesome  emulation  of  two  men  who  are  working  side  by 
side  at  a  common  task  tainted  with  an  unnatural,  sickly 

-  When  the  present  argument  reaches  the  point  of  considering  what  is 
called  "barter-cost"  it  will  be  seen  that  a  great  many  individuals  are 
engaged  in  competitive  activity  as  hirelings  of  the  leaders  in  the  struggle. 
They  are  paid  a  salary  or  wages  to  "push"  some  article.  In  their  en- 
deavors to  do  this  honestly  and  well  they  are  often  quite  unconscious  of 
the  true  nature  of  their  efforts.  They  are  doing  their  best  to  earn  their 
income,  and  whatever  success  crowns  their  work  seems  to  them  merely  as 
so  much  good  created  out  of  nothing.  It  will  be  seen  later  that  this  never 
can  be  true.  But  the  point  now  to  be  emphasized  is  that  they  can  honestly 
think  so  only  when  their  station  in  the  competitive  ranks  is  a  com- 
paratively low  one.  Their  employers  always  know  well  that  each  sale 
they  may  make,  each  contract  they  may  close,  is  merely  one  drawn  away 
from  the  enjoyment  of  an  equally  hungry  competitor. 


EMULATION   AND   COMPETITION  93 

envy,  which  meanly  seeks  the  destruction  of  the  other's 
goods  more  than  it  does  the  increase  of  one's  own.  There 
are  such  men,  but  they  are  fortunately  in  the  extreme 
minority.  With  competition,  however,  it  must  be  recog- 
nized at  the  start  that  the  underlying  idea  of  the  whole 
process  is  just  this  hope  of  undermining  another's  welfare. 
As  already  pointed  out,  it  does  not  necessarily  arise  from 
inherent  meanness  of  spirit  on  the  part  of  those  entering 
upon  barter;  but  it  not  only  begets  it,  but  It  demands  its 
cultivation  before  marked  success  may  possibly  be  attained. 
It  exists  primarily  because  the  institution  adopted  by 
public  opinion  for  the  determination  of  the  price  of  ex- 
change permits  no  other  attitude,  permits  increase  of  one's 
own  goods,  in  exchanging,  only  through  the  medium 
of  the  active  decrease  of  another's  goods.  Since  all 
men  are  at  all  times  most  anxious  to  carry  on,  from 
mere  appetite,  the  greatest  volume  of  exchange  and  con- 
sumption possible,  there  is  plainly  no  need  to  promote 
these  processes.  There  is  no  need  of  other  prelimi- 
nary to  exchange,  after  production,  than  the  determina- 
tion of  an  equitable  price.  Such  a  determination  would 
appear,  to  the  rational  Investigator,  to  be  a  mere  ques- 
tion of  accurate  record  of  individual  production,  a 
purely  intellectual  question,  its  peaceful  scientific  settle- 
ment, in  a  civilized  community,  to  be  accomplished  by  rea- 
son and  to  be  protected  by  law.  But  the  reference 
of  the  matter  to  barter  for  settlement  allows  the  public 
reliance  to  lapse,  instead,  to  a  balance  of  personal 
forces  which  are  quite  other  than  rational;  in  reality  to  the 
clumsy  method  of  approximation  known  as  the  trial  by 
nerve-duello.  In  all  forms  of  duello  success  may  be  at- 
tained only  by  doing  harm  to  one's  opponent;  but  for 
refinement  of  veiled  malevolence,  of  result  If  not  of  will, 
the  duello  which  was  relied  upon  in  questions  of  criminal 


94  THE    COST    OF   COMPETITION 

law  before  the  Carlovingian  kings  cannot  compare  with 
the  form  of  duello  known  as  barter  which  is  relied  upon  by 
the  twentieth  century  for  the  settlement  of  all  questions  of 
economics.  The  instinctive  contemnation  of  its  spirit,  by 
all  peoples  at  all  times,  is  best  attested  by  the  attitude  of 
the  world  toward  the  Jewish  people  and  their  racial  avoca- 
tion. But  it  is  not  the  pawn-broker  nor  the  ready-made- 
garment  dealer  of  New  York's  East-Side,  operating  upon 
a  microscopic  scale,  who  best  typifies  the  meanness  of 
barter.  It  is  the  stock-market  and  its  offspring,  the 
"  trust,"  operating  upon  a  scale  in  which  millions  are  units, 
respected,  upheld  and  deferred  to  by  the  highest  in  the 
land,  with  its  "  corners,"  its  forced  sales,  its  purchases 
"  short "  and  its  deliberate  fluctuation,  whether  by 
"  bulls "  or  by  "  bears,"  of  the  valuation  of  securities 
owned  by  helpless  individuals  scattered  all  over  the  land, 
— solely  in  order  that  self  may  gain  through  loss  by  the 
opposing  faction  and  by  the  public, — which  is  by  far  the 
baldest  instance  of  this  process  now  extant. 

Emulation  vs.  Competition  in  Relation  to  the 
Commonwealth.  In  emulation  the  underlying  Idea  Is  to 
produce  more  wealth  than  one's  neighbor.  The  funda- 
mental impulse  back  of  this  idea  may  be  taken.  If  you 
choose,  to  be  pure  selfishness,  that  one's  self  may  enjoy 
the  consumption  of  more  wealth.  But  If  this  selfishness 
be  compelled  to  seek  satisfaction  by  exertion  against 
natural  obstacles,  then  must  one's  neighbor  be  benefited 
Incidentally  to  one's  self.  It  is  only  when  the  selfishness 
is  permitted  to  seek  gain  by  another's  loss,  by  exertion 
against  human  resistance,  that  it  may  become  harmful  to 
anyone  but  self.  But  if  this  be  forbidden  and  the  selfish- 
ness be  guided  into  emulative  channels,  there  arises  closely 
second  to  it  the  pleasant  consciousness  that  the  extra  effort 
Is  resulting  in  a  gain  to  the  community  as  a  whole.     The 


EMULATION    AND    COMPETITION  95 

worker  and  the  rest  of  society  are  both  better  off  for  his 
emulative  striving;  there  are  more  goods  in  the  world; 
all  commodities  are  more  easily  obtainable.  His  neighbor 
Is  no  worse  off  than  before,  except  for  what  loss  of  pride 
accompanies  defeat  in  honorable  contest,  breeding  lusty 
stimulus  to  further  effort.  As  this  reaction  always  appears 
In  the  neighbor,  to  some  degree  at  least,  the  result  of  the 
emulation  is  an  increase  of  the  loser's  wealth  as  well  as 
In  the  winner's.  Both  of  them  produce  and  possess  more 
wealth,  as  the  result  of  the  contest,  than  they  did  before: 
one  with  and  the  other  without  added  honor  and  prestige. 
Therefore  it  is  to  be  stated  with  especial  emphasis,  as 
the  thing  primarily  characteristic  of  the  nature  of  emula- 
tive production,  that,  whether  it  be  undertaken  from  the 
most  sordid  or  from  the  most  altruistic  of  motives,  the 
results  accruing  to  all  parties  actively  concerned,  and  to  the 
public  outside,  are  alike  a  gain  in  wealth  and  in  bodily  com- 
fort, the  latter  differing  between  the  several  parties  only  in 
degree.  But  in  competition  the  underlying  idea  Is  just  the 
opposite  of  this  increase  In  the  production  of  wealth.  It 
is  to  secure  more  wealth  to  the  striving  Individual  alone, 
not  by  producing  more  from  the  bosom  of  Mother  Earth, 
by  making  two  blades  of  grass  grow  where  one  grew 
before,  but  by  getting  It  away  from  the  store  already  ac- 
cumulated by  one's  neighbor;  and  if,  incidentally  to  the 
effort,  the  neighbor  may  only  be  somewhat  discouraged 
also,  so  that  he  shall  not  resist  so  strenuously  the  next 
time,  why  that  is  further  gain  to  the  bargainer. 

Barter  Further  Defined.  In  Its  present  form,  com- 
plicated as  it  Is  by  the  intricacy  of  modern  life  far 
away  from  the  simple  elementary  bargain  between  fisher- 
man and  hunter  which  was  adduced  for  the  sake  of  Illus- 
tration, barter  may  be  defined  as  the  forced  passage 
through  one's  hands  of  the  ownership  of  either  goods  or 


96  THE    COST    OF    COMPETITION 

the  chance  to  labor  at  the  greatest  possible  profit  to  the 
temporary  owner,  or,  what  is  the  same  thing,  at  the 
greatest  possible  cost  to  the  community  of  tJie  value  con- 
cerned. This  means  that,  in  the  case  of  goods,  the  result- 
ant price  will  be  the  highest  which  may  possibly  tempt  pur- 
chasers; in  the  case  of  labor  it  means  that  the  lowest  wage 
will  prevail  which  will  possibly  tempt  labor  to  exertion. 
The  standard  phrase  for  this  method  in  railroad  economics 
is  "  charging  all  the  traffic  will  bear."  The  same  practice 
is  the  standard,  and  the  only  successful,  policy  in  all  forms 
of  business.  The  widespread  delusion  that  business-effort 
consists  in  keeping  prices  as  low  as  possible  merely  shows 
how  universally  the  profit-seekers  have  been  able  to 
deceive  the  public,  often  including  themselves.  The  con- 
stant aim  of  all  business-endeavor  is  undoubtedly  to  make 
prices  seem  low.  Owing  to  the  opposition  of  the  other 
dealers  in  the  same  line  it  is  undoubtedly  also  the  aim  to 
make  prices  actually  as  low  as  possible, — if  the  word  pos- 
sible be  interpreted  as  meaning  "  consistent  with  getting 
the  maximum  of  profit  transferred  from  the  community  to 
their  own  pockets."  Even  if  "  quick  sales  and  small  prof- 
its "  be  the  motto  which  leads  to  success,  it  none  the  less 
remains  an  incontrovertible  fact  that  if  the  seller  thus 
derives  a  greater  net  income  he  has  drawn  from  the 
pockets  of  the  people  a  greater  tax  for  his  support;  nor 
does  the  fact  that  he  has  handled  more  goods  offset  the 
loss,  for  it  will  be  developed  later  that  the  total  amount 
of  goods  thus  handled  to  the  community  cannot  be 
increased  by  any  such  means.  What  he  has  handled  his 
competitors  have  failed  to  handle;  and  if  the  quick  sales 
have  been  artificially  stimulated  by  extra  expense  in  adver- 
tising, for  all  this,  too,  the  buyer  must  pay,  and  the  cost  to 
the  community  is  thus  doubly  increased,  although  trebly 
disguised. 


EMULATION    AND    COMPETITION  97 

When  the  final  survival  of  the  fittest  proclaims  the  most 
successful  business-man,  it  always  develops  that  he  became 
so  because  he  concentrated  his  skill  and  effort  not  upon 
keeping  down  the  cost  of  production,  but  upon  keeping  up 
prices.  The  common  run  of  little  profit-seekers,  who 
scrape  along  upon  what  they  consider  to  be  a  bare  living, 
always  make  this  mistake,  of  honestly  trying  to  sell  near 
the  cost  of  production, — though  where  is  the  one  who 
strives  purely  in  this  line?  The  successful  fellows  are  those 
who  abandon  all  pretense  of  handling  goods  and  perform- 
ing service;  who  go  in,  instead,  simply  to  "  make  money." 
And  they  do  make  money,  because  times  are  "  good," 
when  prices  are  at  their  highest,  which  is  naturally  the 
time  of  greatest  hardship  to  the  consumer. 

For  all  of  such  effort,  whether  of  trying  to  buy  cheaply 
or  to  sell  dearly,  society  as  a  whole  cannot  possibly  be  any 
the  richer;  the  loser  at  the  game  is  certain  to  be  the  poorer. 
While  this  effort  is  not,  of  course,  to  take  away  the  other's 
wealth  by  visible  physical  force,  which  would  be  bald 
robbery,  yet  it  is  the  nearest  possible  thing  to  this  which 
escapes  the  eye  or  the  hand  of  the  law :  the  persuading 
him  to  relinquish  his  legal  title  to  his  wealth  (or  to  that 
portion  of  it  which  constitutes  the  profit  under  dispute) 
under  the  artificially  created  and  more  or  less  forced  idea 
that  it  is  profitable,  or  expedient,  or  necessary  for  him  to 
do  so,  when  it  is  not.  Whatever  the  method,  however, 
or  the  conscious  motive  behind  it,  the  effort  is  aimed 
straight  at  the  other's  loss;  in  no  other  way  can  barter  suc- 
ceed in  amassing  wealth  or  in  demonstrating  the  personal 
superiority  of  its  initiator.  ^ 

3  In  the  State  of  Ohio  exists  a  factory  which  has  become  world-famous 
as  exemplifying  the  most  advanced  ideas  as  to  the  most  humane  methods 
of  organization  of  workmen  under  the  modern  factory-system.  To  de- 
scribe in  detail  the  democratic,  cooperative  government  of  its  depart- 
ments by  committees,  the  bathrooms,  the  dining-rooms,  the  retiring-rooms 


98  THE    COST    OF    COMPETITION 

It  is  only  the  tremendous  complexity  of  modern  indus- 
try and  commerce  which  prevents  its  always  being  per- 
fectly plain  to  the  bargainer,  and  to  the  onlooker,  that 
what  he  gains  by  bargaining  the  other  must  lose.  So  prev- 
alent is  barter  as  the  standard  avocation  of  the  most 
prominent  classes  of  society  that  it  is  this  fact  alone  which 
preserves  one's  faith  in  the  general  uprightness  and 
generosity  of  the  race.  Because  of  its  inevitably  being, 
however,  an  attempt  at  loss  to  one's  opponent,  it  may  be 
stated  with  the  utmost  deliberation  and  earnestness  that 
premeditated  entrance  into  barter  with  another  over  the 
price  of  goods  or  of  labor  the  quality  of  which  is  not  in 
question,  whether  it  concerns  a   ten-cent  haircomb   or  a 

for  the  women-employees,  etc.,  would  quickly  identify  the  place  to  the 
reader;  for  in  these  points  it  is  unique.  The  president  of  the  corporation 
I  know  personally  to  be  one  of  the  most  generous  of  men.  The  vacation- 
trips  in  summer  and  entertainments  in  winter  which  he  presents  to  his 
employees  are  phenomenal  in  their  open-handedness.  Yet  at  all  this  feast 
of  altruism  attends  a  skeleton.  It  occupies  the  center  of  the  works  and 
constitutes  the  explanation  of  the  source  of  the  power  and  wealth  which 
permit  this  generosity.  I  call  it  "the  cemetery,"  the  graveyard  of  men's 
hopes  and  happiness.  It  is  a  room  some  fifteen  feet  square,  as  I  remember 
it,  almost  devoid  of  windows  and  doors,  the  walls  of  which  are  lined  to 
the  ceiling  with  shelves.  Upon  the  shelves  are  samples  of  every  machine, 
originally  competitive  with  the  enterprise  in  question,  which  it  succeeded 
in  driving  off  the  market  before  it  could  attain  to  the  ability  to  give 
trips  to  the  World's  Fair  to  hundreds  at  a  time.  These  machines  are  not 
upon  the  shelf,  literally  and  figuratively,  because  their  mechanical  design 
possessed  no  value;  for  very  many  of  their  essential  features  are  now 
made  use  of,  incorporated  into  the  design  of  the  victorious  corporation. 
They  are  there  because  the  law  of  barter  permits  a  competitor  whose 
goods  possess  merely  a  greater  (but  not  the  only)  value  to  entirely  cancel 
the  earning-capacity  of  competing  goods  which  possess  a  very  substantial, 
but  a  lesser,  value.  How  many  broken  hopes  and  broken  families  are 
represented  by  this  cemetery  no  one  may  ever  know,  with  accuracy;  but 
anyone  who  looks  upon  the  display  can  readily  believe  that  our  generous- 
hearted  president  must  labor  in  charity  for  more  than  one  lifetime  before 
he  can  erase  from  the  books  of  the  recording  angel  the  account  of  what  he 
has  done — was  forced  by  existing  law  and  public  opinion  to  do,  perhaps 
with  no  malevolence  on   his   part — in   "establishing  his  business." 


EMULATION    AND    COMPETITION 


99 


ten-million-dollar  railroad,  is  as  thoroughly  and  funda- 
mentally a  selfish  and  unchristian  act  as  is  any  open  to 
human  choice.  The  fact  that  familiarity  with  the  sordid 
deed  has  bred  respect,  or  at  least  toleration,  for  it  does  not 
alter  the  truth  as  to  its  inherent  nature. 

Emulation  and  Competition  Contrasted.  In  order 
to  demonstrate  the  truth  of  this  statement  and  to  com- 
plete the  distinction  between  the  two  opposite  pro- 
cesses, Emulation  and  Competition,  in  their  fundamental 
type,  the  following  parallel  columns  are  presented,  to 
contrast  their  opposite  effects  upon  the  surrounding  body 
politic,  as  well  as  their  reactionary  effects  upon  their 
followers : 


EMULATION 
is  strife  to  see  who  may  add 
the  most  wealth  to  self  and 
to  the  body  politic  simulta- 
neously, by  increasing  one's 
natural  productivity.  It  con- 
stitutes the  chief  motive 
power  of  production,  and 
therefore  of  pure  exchange, 
or    true    commerce. 


COMPETITION 
is  strife  to  see: 

(i)  Who  may  secure  away  from  his 
neighbors  the  chance  to  begin  to  produce 
wealth;  for  the  ability  to  find  a  market 
for  one's  goods  or  labor,  at  any  price,  is 
a  plain  preessential  to  production ; 

(2)  Who  may  acquire  from  his  neigh- 
bors the  most  of  their  wealth,  by  exalting 
prices  in  selling  to  them  or  by  depressing 
prices  in  buying  from  them,  in  so  far  as 
ability  will   permit; 

(3)  Who  may  most  decrease  the 
wealth  of  the  body  politic  (though  the 
barterer  is  not  conscious  of  this  purpose 
except  when  he  tries  to  beat  the  govern- 
ment) (a)  By  excluding  others  from  the 
privilege  of  exchange  or  of  labor;  that 
is,  by  controlling  the  market;  or  (b)  By 
decreasing  production  so  as  to  maintain 
or  exalt  prices; 

For  by  either  plan  the  active,  aggres- 
sive bargainer  wins.  Either  process  con- 
stitutes a  restraint  of  trade, — a  restraint 
merely  of  the  other  fellow's  trade,  as  the 
bargainer  sees  it,  but  none  the  less  a  re- 
straint of  the   total   volume  of  trade. 


lOO 


THE    COST    OF    COMPETITION 


In  emulation  the  efforts 
are  side  by  side,  or  parallel, 
and  the  economic  resultant 
to  society  must  consist  of  the 
sum  of  the  individual  forces 
exerted.      This    is    shown    in 


In  competition  the  efforts  are  face  to 
face,  or  opposing,  and  the  economic  re- 
sultant to  society  must  consist  of  the  dif- 
ference of  the  forces  of  the  several  indi- 
viduals. This  is  shown  in  Fig.  2.  If 
mil  represent,  each  by  its  direction  and 


R 


R 


■> 


Fig.  I.  Emulative  Efforts 


Fig.  2.  Competitive  Efforts 


Fig.  I.  If  mil  represent, 
each  by  its  direction  and 
magnitude,  the  productivi- 
ties of  a  number  of  individ- 
ual producers,  of  differing 
abilitj-,  active  upon  a  given 
field  of  production  FF,  then 
(i)  Their  directions  must 
be  substantially  parallel. 
Equilibrium  insures  this. 
Education,  imitation  and  ri- 
valry all  lead  the  individual 
to    harmonize    his   efforts,    in 


magnitude,  the  forces  exerted  by  the  same 
individuals  as  in  Fig.  i,  but  now  active 
in  competition  about  the  common  cen- 
ter   C,    then: 


(i)  Their  directions  must  be  either 
centripetal  or  centrifugal ;  that  is,  either 
seeking  a  single  objective  opportunity  for 
sale,  exchange  or  employment,  or  else 
seeking  to  divert  a  given  single  subject- 
ive  opportunity    (a   purchaser)    each   into 


EMULATION    AND    COMPETITION 


production,   with   the   general 
trend    of   advance. 

(2)  The  resultant  net 
productivity  of  value  to  the 
community  is  shown  by  R 
and  is  practically  equal  to 
the  sum  of  the  component 
forces. 


his  own  shop.  (The  average  number  of 
such  radial  forces  about  a  single  center, 
in   actual   life,  is  about  five  or  six.) 

(2)  The  resultant  net  productivity  of 
value  to  the  community  is  shown  by  R, 
the  geometric  resultant  of  IIIII.  This  is, 
in  one  sense,  equal  to  the  difference  of  the 
component  forces. 


If  one  man's  effort  or  efficiency  should  increase  at  any 
time,  it  may  be  expected,  from  the  natural  spirit  of  rivalry, 
that  the  efforts  of  the  others  will  increase  similarly,  in 
response.    This  is  equally  true  on  either  side.    Therefore : 


(3)  The  resultant  net 
gain  to  the  community,  in 
such  case,  must  be  approxi- 
mately as  many  times  the 
increase  of  the  original 
worker  as  there  are  co- 
workers. 


(3)  The  resultant  net  gain  to  the  com- 
munity, in  such  case,  must  bear  a  very 
small  proportion  to  the  total  increase  in 
effort.  If  the  growth  of  each  worker's 
effort  is  in  uniform  proportion  to  his  orig- 
inal effort,  the  net  gain  to  the  com- 
munity must  bear  the  same  proportion  to 
the  total  increase  of  effort  that  R  of 
Fig.  2  does  to  the  sum  of  all  the  I-forces 
(R)  of  Fig.  I.  If  the  growth  of  each 
worker's  effort  were  alike,  there  w-ould 
be  no  resultant  change  in  R:  the  net  gain 
to  the  community  from  all  this  increase 
in  skill  and  energy  ivould  be  just  zero. 


(4)  The  direction  of  the 
common  progress  of  society- 
is  in  the  direction  of  each 
man's  efforts.  Therefore,  the 
direction  of  individual  mo- 
tion, which  is  determined  by 
the  effect  of  the  resultant 
force  upon  the  common 
mass,  is  always  positive.  It 
is  in  the  direction  of  his  own 
effort  and  of  the  community- 
effort.    Each  citizen   observes 


(4)  The  direction  of  the  common  prog- 
ress of  society  is  in  the  direction  of  the 
efforts  of  less  than  one-half  of  the  competi- 
tors. Therefore,  the  direction  of  individ- 
ual motion,  which  is  determined  by  the 
effect  of  the  resultant  force  upon  the 
common  mass,  is  very  largely  negative. 
A  large  proportion  of  the  competitors  ob- 
serve that  their  individual  efforts  are 
crowned  with  failure  and  that  their  mo- 
tion is  an  enforcedly  backward  one,  hope- 
lessly   overcoming    their    most    strenuous 


I02 


THE    COST    OF    COMPETITION 


his  efforts  crowned  with  suc- 
cess and  stamped  with  the 
approval  of  the  community. 
His  moral  attitude  is,  there- 
fore, one  of  gratification, 
enthusiasm,  renewed  hope 
and  patriotic  pride.  His 
physical  attitude  becomes  a 
corresponding  one  of  re- 
newed vigor.  His  pride  in 
his  work  sustains  him  more 
than  does  the  food  which  it 
briogs  to  him. 


efforts.  {Bradstrect's  reports  that  some- 
thing like  90  per  cent,  of  all  new  com- 
mercial ventures  are  failures.)  The  re- 
sultant moral  attitude  is  therefore  one  of 
disappointment,  of  dejection,  of  sullen 
enmity  or  vengeful  rage,  according  to  the 
individual  make-up.  The  worker's  phys- 
ical attitude  becomes  either  one  of  list- 
lessness  or,  if  vigor  be  retained,  it  tends 
to  be  diverted  into  moral  dissipation  or 
into  violence,  as  occupations  bringing 
more  satisfaction  than  does  labor.  He  is 
tempted  to  become, — indeed,  he  is  forced 
to  choose  between  becoming, — either  a 
cynic,  a  drunkard,  a  gambler,  a  tramp,  a 
criminal,  a  lunatic,  a  suicide  or  an  an- 
archist. Escaping  all  of  these, — for  there 
are  all  degrees  of  entanglement  in  this 
situation, — he  is  at  least  forced  into  that 
familiar  class  where  we  speak  of  him,  as 
kindly  as  we  can,  as  one  who  has  "  lost 
his  grip." 


(5)  The  velocity  of  prog- 
ress, due  to  the  action  of  the 
resultant  force  upon  the 
common  mass,  is  much 
greater  than  that  which 
would  be  due  to  the  efforts 
of  the  individual  alone. 
Each  has  the  sense  that  the 
others  are  helping  him.  The 
moral  and  physical  well- 
being  just  noted  is  still  fur- 
ther  enhanced   thereby. 


(s)  The  'velocity  of  progress,  due  to 
the  action  of  the  resultant  force  upon  the 
common  mass,  even  as  observed  by  those 
with  whose  efforts  it  coincides  in  direc- 
tion, is  discouragingly  small.  Even  to 
the  successful  man  success  does  not  seem 
prompt  or  complete  or  satisfactory.  It  is 
tasteless.  He  awakens,  usually  in  later 
life,  to  the  bitter  realization  that  the  ut- 
most skill  in  bargaining  cannot  possibly 
win   one   happiness. 


(6)  With  the  individuals 
associated  in  emulation  there 
is  no  inducement  to  depart 
from  parallelism  and  there 
is  every  inducement  to  per- 
fect it. 


(6)  In  competition  there  is  every  in- 
ducement to  attain  the  minimum  of  par- 
allelism and  the  maximum  of  concentra- 
tion about  a  common  center.  When  the 
forces  are  centrifugal  it  is  plain  that  the 
system  is  in  stable  equilibrium:  that  the 
resultant  will  move  the  common  mass 
toward  a  point  where  all  the  forces  are 
equally   centrifugal,    the    resultant   is    zero 


EMULATION    AND    COMPETITION  103 

and  no  more  motion  is  possible.  When 
the  forces  are  regarded  as  centripetal,  any 
angular  gap  on  one  side,  which  alone 
could  make  the  resultant  R  of  appreciable 
size,  reveals  an  opportunity  for  the  en- 
trance of  a  new  competitive  force,  the 
addition  of  which  will  bring  the  system 
again  into  the  maximum  degree  of  neu- 
trality. It  will  be  proven  later  that  there 
always  exists  upon  the  outside  of  any 
such  system  a  pressure  which  will  force 
into  it  additional  centripetal  energy 
whenever  opportunity  occurs.  ( See 
page  184.) 

This  last  statement  in  regard  to  competition  is  the  same, 
in  other  form,  as  that  given  on  page  81.  Complete  bal- 
ance of  the  radial  forces  would,  of  course,  result  in  no 
motion  at  all.  The  truth  of  the  law  is  shown  by  the  fact 
that  such  deadlock  as  this  is  exactly  what  is  occurring 
repeatedly,  in  actual  commerce,  under  the  name  of  "  hard 
times  " ;  but  it  is  only  local  and  temporary.  Some  motion 
of  trade  must  be  permitted,  of  course,  else  the  radial  forces 
would  lose  their  sustenance  and  die  away.  But  it  always 
tends  toward  a  minimum,  so  far  as  barter  is  influential 
in  guiding  it.  It  is  emulation  alone  which  promotes  all 
industry  and  all  commerce;  it  is  competition  alone  which 
limits  that  activity  to  its  present  repressed  configuration. 

The  play  of  forces  which  has  just  been  discussed  in  an 
abstract,  general  aspect  develops  concrete  illustrations  in 
any  walk  of  industry  or  commerce  which  one  may  choose 
to  enter.  In  any  such  case  it  is  vain  to  expect  that  the 
regrettable  effects  of  competition  will  be  visible  in  the  pe- 
cuniary returns,  or  the  lack  of  them,  awarded  to  the 
parties  directly  engaged  therein.  Indeed,  quite  the  oppo- 
site is  true.  The  most  gainful  of  all  occupations,  to  the 
individual,   is  successful  barter.     This  paradox,  that  the 


I04  THE    COST    OF    COMPETITION 

one  line  of  effort  which  accomplishes  practically  nothing 
more  than  the  negativing  of  a  neighbor's  equal  effort  in 
the  opposite  direction  should  be  more  highly  rewarded  by 
the  community  than  is  effort  productive  of  value,  consti- 
tutes the  last  and  heaviest  indictment  of  the  competitive 
system  on  the  score  of  injustice;  but  the  explanation  of  the 
fact  involves  a  discussion  of  the  interaction  of  two  such 
systems  as  Figs,  i  and  2  when  operative  side  by  side  within 
the  same  community.  This  task  involves  more  than  the 
simple  diagrams  just  presented  and  must  be  deferred  to  a 
later  page.  Nevertheless,  no  actual  incident  of  competi- 
tive commerce  can  be  investigated,  in  terms  of  what  has 
preceded,  without  according  full  evidence  of  the  absurdity 
and  the  inefficiency,  if  nothing  more  cruel,  which  is  ever 
characteristic  of  the  competitive  plan  of  procedure. 

For  instance,  let  It  be  known  in  the  open  market  that  a 
certain  mill-owner  desires  a  steam-engine.  In  this  case  the 
consumer  is  not  one  of  the  common  populace,  influenced  by 
the  fashion  of  the  hour  or  any  similar  whim.  He  is  neces- 
sarily a  man  above  the  average  of  intelligence,  although 
It  is  quite  proper  to  assume  that  he  Is  not  an  engineer.  He 
enters  the  market  Impelled  by  quite  other  motives  than 
psychic  desire.  He  has  no  craving  for  steam-engines  to 
be  gratified.  On  the  other  hand,  he  probably  decides  to 
buy  one  with  great  reluctance;  he  would  much  prefer  to 
keep  his  money  In  his  pocket.  But  he  needs  an  engine  to 
perform  a  certain  service-  in  his  factory.  He  knows  what 
that  service  is,  but  he  is  not  supposed  to  know  what  sort 
of  engine  will  best  perform  It;  that  Is  the  business  of  the 
professional  engineer. 

The  supply  of  that  engine,  on  the  other  hand,  will  not 
ordinarily  bring  with  It  the  myriad  of  economic  questions 
arising  in  the  production  of  any  finished  article  from  the 
raw  material,  such  as  land-rent,  interest,  taxes,  etc.     With 


EMULATION    AND    COMPETITION  105 

engines  of  moderate  size  experience  has  resulted  in  the  sur- 
vival of  a  half-dozen  standard  types,  each  of  which  is 
especially  fitted  for  some  particular  sort  of  service.  It  is 
the  buyer's  task  to  select  the  correct  type  to  suit  his  own 
particular  conditions. 

Nearly  all  engines  are  built  by  one  party  and  sold  by 
another.  To  the  seller  they  come  from  the  factory  com- 
plete and  unalterable.  They  appear  to  him  as  a  box  ready 
for  shipment  and  a  charge  upon  his  ledger.  Of  all 
economic  and  engineering  questions  which  lie  back  of  those 
items  he  is  totally  unconscious,  economically  speaking,  if 
not  in  actuality. 

But  between  the  mill-owner  who  needs  an  engine  and 
the  series  of  boxed  engines  awaiting  his  orders  in  their 
warehouses  there  arise  two  questions. 

( 1 )  Suitability  to  his  purpose ; 

(2)  Price. 

To  settle  these  questions  there  journey  to  his  mill-office 
a  set  of  representatives  of  the  several  engines :  commercial 
travelers  of  the  highest  type,  practically  all  of  them  col- 
lege-bred engineers,  usually  of  good  family  and  in  the 
pride  of  their  youth.    Their  object  in  coming  is  threefold  : 

( 1 )  To  secure  the  order; 

(2)  To  take  it  at  a  good  price;  and 

(3)  Quite  incidentally  to  the  others,  to  furnish  the 
buyer  with  the  engineering  information  necessary  for  an 
intelligent  choice  productive  of  value  and  satisfaction. 

The  importance  given  to  these  several  objects,  in  the 
mind  of  the  seller,  is  in  the  order  named.  Their  impor- 
tance to  the  buyer  and  to  the  community,  as  a  matter  of 
fact,  is  exactly  the  opposite:  (3)  should  come  first  and 
(i)  and  (2)  should  not  enter,  to  the  consumption  of 
valuable  time  and  effort  in  no  production  of  value,  at  all. 

It   is   also   properly   to   be   assumed   that   the   several 


io6  THE    COST   OF   COMPETITION 

engines  are  all  equal  In  the  honest  quality  of  their  work- 
manship. It  is  usually  so  in  actual  practice,  if  we  exclude 
a  small  and  utterly  worthless  minority;  but  their  different 
designs  make  them  of  varying  suitability  to  the  mill- 
owner's  purpose. 

What  are  the  results,  to  both  parties  to  the  conference, 
of  this  method  of  attaining  a  choice? 

As  to  the  salesmen  and  their  backers: 

(i)  One  only  can  possibly  secure  the  order.  Th^ 
rest  are  inevitably  condemned  to  failure.  There  are  any- 
where from  two  to  ten  of  them.  Any  one  of  them  could 
have  given  all  the  information  needed,  aided  the  buyer  to 
a  really  intelligent  selection,  taken  the  order  and  had  the 
engine  shipped,  in  one-tenth  of  the  time  actually  con- 
sumed, had  he  been  paid  his  same  salary  to  represent  all 
of  the  engines  impartially.  But  instead,  all  but  one  of 
these  young  men  are  Inevitably  destined  to  journey,  argue, 
scheme  and  worry,  wait  and  go  home  again,  probably 
repeatedly,  utterly  In  vain.  An  efficiency  of  result  ranging 
anywhere  from  fifty  down  to  ten  per  cent,  of  the  con- 
tributed effort  certainly  does  not  speak  well  for  the  Intelli- 
gence of  the  competitive  plan,  in  the  light  of  modern 
refinements  of  efficiency. 

(2)  The  order  has  to  be  taken  at  the  lowest  price  at 
which  the  winning  representative  can  afford  to  handle  the 
job  and  continue  to  do  business.  Although  the  efforts  of 
the  five  losing  salesmen  have  finally  left  in  his  hands  the 
job,  the  privilege  of  building  an  engine,  they  have  at  least 
forced  him  to  accept  the  task  at  a  remuneration  so  low 
that  it  Is  questionable  whether  he  wants  It  or  not.  So 
productive  of  human  happiness  to  all  Is  this  plan! 

As  to  the  buyer: 

( I )  Instead  of  having  the  comparative  advantages 
and   disadvantages   of  the  several  machines  laid  impar- 


EMULATION    AND    COMPETITION  107 

tially  before  him,  that  he  may  make  intelhgent  and  accu- 
rate choice,  he  has  had  to  contend  with  the  efforts  of  six 
intelhgent  young  men  attempting  to  blind  him  and  guide 
him  in  six  different  directions.  In  a  maximum  amount  of 
time  and  effort  he  has  obtained  a  minimum  amount  of 
information,  of  a  minimum  quahty  as  to  reliabihty  and 
lucidity, — if,  indeed,  he  has  not  been  accorded  a  deal  that 
he  were  richer  without.  Any  one  of  the  six  young  men, 
if  he  had  been  equally  supplied  with  the  records  of  the 
several  engines,  if  he  had  been  impartially  related  to  all 
of  them  and  had  not  been  interfered  with  by  the  other 
five,  could  have  aided  the  mill-owner  to  a  far  more  intelli- 
gent decision  in  one-tenth  of  the  time  actually  taken  for 
negotiation.  But  no  one  of  them  is  permitted  to  try  to 
furnish  true  information.  He  need  not  always  deliber- 
ately lie,  although  the  temptation  is  great  and  human 
nature  is  weak;  but  he  must  confine  himself  to  those  half- 
truths  which  throw  the  best  light  on  his  own  engine  and 
which  derogate  the  others  by  inference, — a  procedure 
which  is  separated  from  unmitigated  deception  by  an 
utterly  impalpable  line.  If,  for  instance,  his  professional 
judgment  leads  him  to  believe  that  another  engine  than  his 
own  would  better  suit  the  service  proposed,  his  whole  atti- 
tude is  inevitably  either  one  of  falsehood  to  the  buyer  or 
of  falsity  to  his  employer. 

(2)  As  to  price,  that  shows  the  worst  failure  of  all. 
The  engines  were  already  in  the  seller's  hands,  perfect  and 
complete,  before  negotiation  opened.  When  it  is  con- 
cluded one  of  them  is  transferred  to  the  purchaser's 
ownership,  absolutely  without  alteration  or  improvement, 
at  just  about  twice  its  completed  cost  as  it  left  the  factory. 
For  of  course  the  selling-houses  are  not  doing  business  at 
a  loss, — "  for  their  health,"  as  the  phrase  goes.  If  they 
sell  an  engine  only  once  out  of  every  six  expeditions  made 


io8  THE    COST    OF    COMPETITION 

by  their  salesmen,  that  one  sale  must  bring  in  enough 
gross  profit  to  cover  the  cost  of  all  six  negotiations,  with 
a  margin  over  for  net  profit.  It  is  inevitable  that  the 
consumer  shall  pay  the  whole  cost  of  competition.  But 
ivhat  he  loses  the  seller  does  not  gain.  Most  of  it  has 
been  lost  in  abortive  effort.  It  has  already  been  pointed 
out  that  the  seller  failed  in  all  of  his  objects  except  to 
scrape  what  he  considers  a  bare  living.  How  completely 
has  the  buyer  failed,  also !  He  started  out  to  buy  at  the 
lowest  price  possible.  But  he  started  out  in  the  wrong 
way:  the  rrtethod  of  barter;  and  when  it  is  finished  and  he 
has  paid  the  cost  of  conducting  the  barter  he  finds  that  his 
engine  has  cost  him  twice  what  it  would  have  if  there  had 
been  no  barter,  if  all  the  bargainers  were  out  of  the  way, 
with  exchange  left  free  and  unhampered,  promoted  only 
by  natural  desire,  by  the  law  of  supply  and  demand.  Then 
he  would  have  gone  to  a  warehouse  where  all  the  engines 
were  displayed,  side  by  side,  each  with  its  record  published 
in  full :  its  failures  and  its  successes,  and  where  all 
were  represented  impartially  by  a  single  salesman  skilled 
as  to  the  proper  field  for  each.  There  he  would  have 
purchased  with  a  maximum  of  accuracy  and  a  minimum  of 
time  and  effort. 

As  to  the  engine  itself: 

( I )  The  primary  effect  of  the  salesmen's  efforts  is  to 
conceal,  to  the  maximum  degree  possible,  the  true  com- 
parative merits  and  demerits  of  each.  But  the  sole  guide 
to  all  evolutionary  progress  is  the  survival  of  the 
fittest.  There  is  no  line  in  which  it  is  more  essential  to  our 
material  prosperity  than  in  the  consumption  of  articles 
involving  technical  skill  in  their  production.  To  the 
prompt  and  accurate  establishment  of  which  of  these  is,  in 
any  case,  the  most  fit  to  survive,  all  barter  stands,  with  all 
the    power   with   which    it   stands    for    anything,    as    an 


EMULATION    AND    COMPETITION  109 

absolute  block.  The  only  method  of  exchange  and  con- 
sumption under  which  the  merits  and  demerits  of  each 
aspiring  applicant  for  public  favor  shall  be  accurately 
determined  with  the  maximum  celerity  is  that  of  perfectly 
free  exchange.  The  consumer  will  stand  as  the  censor, 
with  all  the  interest  and  all  the  impartiality  which  can  be 
brought  into  the  case:  if  he  only  be  given  that  chance  to 
intelligently  express  himself  which  free  exchange  awards. 
The  only  advocate  needed  by  any  novel  device  or  proposi- 
tion is  the  enthusiasm  of  its  originator  and  its  own 
inherent  merit, — and  both  the  personality  of  the  salesmen 
and  the  material  worth  of  the  article  which  lie  back  of 
modern  commercial  success  are  very  different  from  this 
indeed. 

It  is  further  to  be  remembered  that  all  questions  back 
of  the  complete  engine,  boxed  and  shipped,  were  neglected. 
If  there  be  need  for  emulation  in  order  to  attain  to  good 
engine-design  and  construction,  there  is  the  place  for  it; 
it  cannot  possibly  enter  the  field  of  barter  just  described. 
But  if  the  box  be  only  opened,  what  a  mass  of  competitive 
waste,  instead  of  productive  emulation,  is  laid  bare! 
Every  item  in  the  entire  engine :  every  standard  screw, 
every  pound  of  pig-iron,  every  day  of  labor;  every  adjunct 
to  the  making  of  any  of  them:  every  building,  every  tool, 
every  piece  of  land,  every  mile  of  transportation,  which 
has  entered  into  the  furnishing  of  every  minor  item  of  the 
whole  completed  structure, — has  been  subject  to  the  same 
competitive  haggling  over  price  and  quality  as  that  just 
outlined:  just  as  unnecessary,  just  as  inefficient,  just  as 
costly !  At  every  step  has  this  enormous  burden  of  wasted 
effort  and  obscured  truth  been  piled  up  until,  to  quote 
Carlyle  freely,  the  greatest  wonder  is  that  anything  ever 
does  manage  to  get  itself  somehow  done,  at  any  price,  how- 
ever great. 


no  THE    COST    OF    COMPETITION 

Yet  this  is  competition  at  its  best,  between  intelligent 
parties,  over  goods  where  there  is  solid  ground  for  tech- 
nical decision,  where  mere  whim  is  not  the  chief  motive  in 
the  buyer's  choice,  to  tempt  the  evil  powers  of  the  seller, 
and  where  the  prize  at  stake  is  a  few  dollars,  more  or  less. 
Most  commonly,  with  the  staple  commodities  such  as 
wheat,  coal,  cotton,  etc.,  where  the  differences  among 
a  number  of  samples  is  to  be  determined  only  by  microscope 
or  test-tube,  the  needlessness,  the  obliquity  and  the  waste  of 
commercial  barter  are  far  worse  than  in  the  field  described. 
What  it  is  at  its  worst  only  God  knows.  Even  in  the  sale 
of  goods  where  the  buyer  is  the  ultimate  consumer,  instead 
of  a  mere  director  of  its  use,  it  is  far  worse.  If  it  costs  as 
much  to  sell  a  steam-engine  as  it  does  to  build  it,  with  a 
sewing-machine  it  costs  twice  as  much  and  with  a  shoe  or 
a  sheet  of  paper  five  times  as  much.  As  the  article 
decreases  in  size  and  importance  this  ratio  grows,  until  in 
some  of  the  minor  articles  of  daily  consumption  it  reaches 
several  fold. 

In  the  exchange  of  ownership  in  the  organizations 
where  these  things  are  made  or  sold,  in  the  stock- 
exchanges  of  the  world — where  exchange,  now  no  longer 
a  pure  hand-maiden  to  production,  has  become  prosti- 
tuted to  the  pleasure  of  and  maintained  or  starved  at  the 
mere  whim  o-f  Barter — the  evil  of  the  institution  becomes 
far  worse.  The  worst  we  shall  never  know.  Not  all  the 
legislative  and  judicial  probings  of  beef-trusts,  railroad 
rates  or  insurance-company  investments  may  ever  hope  to 
unearth  more  than  a  tithe  of  the  scandal. 

But  in  no  such  case  does  the  evil  develop  as  it  does  in 
the  purchase  and  sale  of  labor.  Here  the  things  at  stake 
are  life  and  family,  soul  and  honor, — not  merely  dollars. 
To  even  partly  appreciate  the  situation  we  must  first  know 
more  about  it. 


VII 
SPECIALIZATION    IN    BARTER 

TO-DAY  society  has  grown,  in  complexity  of 
organization,  far  beyond  the  primitive  period 
when  each  producer  carried  his  goods  to  market 
and  there  bargained  over  their  exchange  for  others.  The 
same  arguments  which  had  already  led  to  specialization 
in  production,  whereby,  even  in  those  primitive  days,  each 
man  was  a  butcher,  a  baker  or  a  candle-stick  maker,  and 
not  all  three  at  once,  would  naturally,  and  eventually  did, 
lead  to  a  further  subdivision  in  specialization:  namely, 
that  between  production  on  the  one  hand  and  barter  on 
the  other.  If  barter  is  to  exist  at  all,  if  it  be  true  that  we 
have  not  yet  learned  how  exchange  may  be  effected  with- 
out it,  it  were  plainly  better  that  those  individuals  who 
were  equipped  by  nature  to  succeed  best  as  producers 
should  concentrate  all  their  time  and  talent  upon  produc- 
tion, while  those  best  adapted  for  bargaining  should 
devote  all  of  theirs  to  that  avocation. 

This  specialization  was  not  effected  until  very  late  in 
the  history  of  economic  evolution.  At  a  very  early  period 
arose  the  merchant,  to  be  sure,  whose  time  was  largely 
and  is  now  often  wholly  given  to  competition;  but  his  use- 
fulness in  the  economic  world  was  also  largely  due  to  the 
fact  that  he  carried  a  stock  of  goods.  When  the  political 
environment  of  production  and  exchange  was  more  un- 
certain than  it  is  now,  and  when  lack  of  transportation 
exposed  each  locality  to  the  full  measure  of  local  irregular- 


112  THE    COST    OF    COMPETITION 

ity  in  production,  the  necessity  for  carrying  stocks  of  goods 
was  much  more  vital  than  it  is  now.  Competition,  too, 
was  narrowly  restricted  by  political  limitations  and  the 
lack  of  transportation.  In  consequence,  the  merchant  of 
the  earlier  centuries  was  much  more  a  supervisor  of  deposit 
of  goods  for  exchange  and  an  insurer  against  fluctuation 
in  valuations  than  he  was  a  bargainer  in  the  modern  sense 
of  the  term.  To-day,  however,  this  relation  Is  quite 
reversed.  To-day  he  very  often  possesses  no  stock  of 
goods  at  all;  all  of  his  business  is  done  on  the  basis  of 
orders  upon  the  warehouses  owned  by  someone  else,  or  by 
orders  upon  someone  who  possesses  such  orders:  securities, 
as  they  are  called. 

Reverting  again  to  primitive  illustrations  of  economic 
principle,  rather  than  to  early  periods  of  economic  history. 
It  may  easily  be  Imagined  how  the  Illustrative  community 
of  fisher-folk  soon  gravitated  Into  a  better  plan  for  barter 
with  the  hunters  than  the  one  previously  described.  The 
competition  between  the  fishermen  for  the  privilege  of 
exchange  would  soon  develop  the  fact  that  some  one  or 
more  among  them  possessed  exceptional  talent  for  driv- 
ing a  bargain.  Such  persons  could  of  course  bring  home 
from  market  a  greater  proportion  of  hares  for  a  given 
supply  of  fish  than  could  the  average  fisherman.  Hence, 
it  would  pay  the  majority  of  the  fishermen  to  strike  an 
agreement  with  these  Individuals,  saying:  "You  repre- 
sent us  at  market,  taking  charge  of  our  fish  there,  exchang- 
ing them  for  hares  upon  the  best  basis  you  can  secure, 
and  bring  us  back  the  hares.  For  your  time  and  trouble 
we  will  then  pay  you  In  both  fish  and  hares."  As  that 
method  would  save  for  both  parties  the  split  in  character 
of  work,  between  fishing  and  going  to  market.  It  would 
constitute  a  gain  for  both  of  them. 

It  would  soon  develop,  of  course,  that  one  bargainer 


SPECIALIZATION    IN    BARTER  113 

could  handle  the  fish  of  a  great  many  fishermen.  Nor 
would  it  be  long  before  the  hunters,  perceiving  the  gain 
which  the  fishermen  had  effected  by  thus  organizing  them- 
selves, would  follow  suit.  Thus  would  the  community 
divide  itself,  for  the  first  time,  into  the  two  fundamental 
classes  of  modern  economic  organization : 

(i)  The  Producers  of  Wealth,  the  greater  in  numbers 
and,  on  the  average,  the  lesser  in  skill;  and 

(2)  The  Bargainers  for  Valuation,  in  the  minority  as 
to  numbers,  but  embodying  the  bulk  of  the  community's 
fund  of  nervous  energy. 

The  dividing  line  between  these  two  classes,  it  is  to  be 
noted,  runs  across  all  of  the  lines  which  divide  the  trades 
one  from  another.  Each  line  of  production  possesses 
both  its  producers  and  its  bargainers.  But  at  the  present 
time  the  complexity  of  organization  is  such  that  each  of 
these  two  classes  appears  as  itself  involving  many  sub- 
divisions, into  specialization  upon  some  special  field  of  or 
aid  to  production  or  bargaining,  as  the  case  may  be. 

This  statement  brings  us  into  contact  with  the  most 
important  of  all  of  these  special  applications  of  barter: 

Capitalism 

The  subject  must  be  opened  with  the  following  pre- 
liminary definitions.  The  term  capital  will  be  found  to 
have  been  more  fully  defined  upon  page  18;  the  term 
capitalism  will  be  more  fully  defined  upon  page  139  and 
following.  A  full  comprehension  of  both  terms  is  to  be 
had  only  from  the  context. 

Capital.  Capital  is  the  material  creation  of  labor,  such 
as  tools,  buildings,  etc.,  which  labor  amasses  and  uses 
in  its  productive  efforts  for  the  further  creation  of  value, 
or  the  earning  of  wages. 


114  THE    COST    OF    COMPETITION 

Capitalism.  Capitalism  is  the  legal  ownership  of  cap- 
ital by  the  capitalist.  It  is  a  creation  of  legal  artifice, 
not  of  productive  labor,  and  is  used  for  the  collection  of 
interest  or  dividends,  and  not  for  the  production  of  Value. 

To  Illustrate  the  distinction  drawn  here  let  us  revert 
again  to  the  hypothetical  community  of  fishermen.  It 
may  be  imagined  that  at  first  the  available  instruments  of 
industry  were  nothing  more  than  lines,  hooks  and  bait. 
The  producers  were  compelled  to  stay  on  shore  and  fish 
from  the  rocks.  Then,  supposes  General  Walker,  some 
one  among  the  savages  more  enterprising  than  the  rest, 
instead  of  wasting  in  sleep  and  gluttony  the  spare  time 
afforded  by  a  season  of  plenty,  took  his  store  of  dried  fish 
into  the  woods  and  there  devoted  his  time  and  ingenuity 
to  the  construction  for  himself  of,  first,  a  raft,  and  later, 
as  he  became  more  skillful,  a  canoe.  It  is  obvious  how 
the  possession  of  this  canoe  might  expand  the  productive 
power  of  this  man.  Not  only  are  fish  apt  to  be  more 
plenty  offshore,  but  they  are  usually  less  variable  In 
supply;  and  even  when  variable  or  wanting  in  one  off- 
shore locality  another  might  be  sought,  with  the  help  of 
the  canoe,  where  plenty  existed  temporarily. 

In  General  Walker's  picture  of  such  an  elementary 
economic  community  he  proceeds  to  develop  from  the 
situation  the  power  which  the  canoe-builder's  thrift  and 
ingenuity  had  given  him  over  his  fellows :  how  he  soon 
found  It  more  profitable  to  stay  ashore,  hiring  out  his 
canoe  to  the  fisherman  who  would  give  him  the  most  fish 
for  the  use  of  it;  how  the  additional  leisure  gained  In  this 
way  permitted  the  building  of  more  canoes  and  their 
rental;  how  these  rentals  accumulated  and  multiplied  until 
they  amounted  to  plethora,  and  our  primitive  capitalist 
retired  from  active  life  to  live  in  ease  upon  the  returns 
from  his  past  labor. 


SPECIALIZATION    IN    BARTER  115 

Such  is  the  attractive  picture  of  worldly  independence 
as  the  result  of  thrift  and  industry  drawn  by  General 
Walker,  with  the  moral  plainly  pointed  that  such  is  the 
path  which  anyone  may  tread  to  the  same  goal,  if  supplied 
with  the  same  fund  of  honorable  thrift  and  industry  to 
begin  with.  It  is  quoted  here  because  it  typifies  the  exist- 
ing popular  conception  of  affairs  among  a  very  large  pro- 
portion of  educated  people. 

More  careful  analysis,  however,  does  not  justify  the 
same  conclusions.  It  reveals,  in  the  first  place,  that  the 
process  described  by  General  Walker  as  a  single  elementary 
one  is  in  fact  complex  and  composite;  that,  in  the  second 
place,  the  nature  and  effects  of  its  several  parts  are  quite 
opposite  in  character;  and  that,  finally,  the  existence  of 
one  of  them  in  the  body  politic  accounts  in  full  for  the 
very  obvious  fact  that  not  everyone,  nor  even  the  majority, 
of  those  endowed  with  commendable  thrift  may  hope  for 
economic  competence,  not  to  mention  independence,  and 
that  the  people  who  do  win  these  things  very  often  display 
qualities  quite  the  opposite  of  these. 

In  the  first  place,  it  is  important  to  eliminate  the  ques- 
tion of  inventorship  and  its  rewards  from  that  of  mere 
ownership;  for  this  portion  of  the  question  is  quite  irrele- 
vant to  the  rest.  Invention  is  merely  a  specialized  form 
of  labor;  usually  more  productive  than  the  other  forms,  it 
is  true,  and  therefore  deserving  of  reward  with  greater 
enjoyment  of  material  wealth.  But  here  must  be 
reiterated  with  emphasis  the  plain  fact  that  invention  is 
indeed  a  mere  form  of  labor,  properly  enjoying  what  it 
produces,  as  should  all  other  labor,  but  no  more.  Just 
what  this  quantity  is  may  not  be  stated  too  dogmatically 
nor  too  simply.  Moreover,  the  question  is  quite  irrele- 
vant; for  we  are  engaged,  at  present,  in  study  of  the  proper 
distribution  of  wealth,  not  between  one  class  of  productive 


ii6  THE    COST    OF   COMPETITION 

labor  and  another,  but  between  productive  labor  on  the 
one  hand  and  capitalism  on  the  other.  Therefore  the 
question  of  the  proper  reward  for  invention  must  be 
eliminated.  It  will  be  supposed  that  the  art  of  canoe- 
building  is  already  in  existence  and  that  the  energetic 
young  savage  of  the  illustration  merely  copies  others  in 
building  his  canoe.  If  we  suppose  him  advanced  to  the 
degree  of  success  where  he  is  recognized  as  a  canoe-builder 
and  is  freed  from  the  burden  of  using  his  canoes  himself 
in  fishing,  by  exchanging  his  current  product  of  canoes 
for  current  supplies  of  fish,  he  then  occupies  merely  the 
position  of  a  specialized  form  of  Labor  engaged  in  Pro- 
duction, as  do  also  the  bait-diggers,  line-spinners,  etc.  If 
law,  order  and  equity  be  supposed  to  prevail,  he  enjoys 
in  this  way  the  full  product  of  his  labor.  If  so,  no  more 
current  income  than  this  can  come  to  him  in  recognition 
of  his  current  labor  except  as  an  abstraction  from  some- 
one else  of  the  wealth  produced  by  their  current  labor. 
What,  then,  is  the  exact  significance  of  the  income  enjoyed 
by  the  retired  canoe-owner  of  General  Walker's  illustra- 
tion? To  repeat,  it  cannot  be  value  received  as  an  equiva- 
lent for  the  labor  exp-ended  in  building  the  canoe;  for  such 
value  is  merely  wages.  That  value  the  canoe-builder  still 
holds  in  his  hands,  in  the  form  of  the  legal  ownership  of 
the  canoe  itself,  and  can  convert  it  into  fish  or  cash  at  any 
time  that  he  chooses  to  sell  the  canoe.  Moreover,  the  in- 
come which  he  draws  from  the  rental  of  his  canoes  has 
nothing  to  do  with  labor  on  his  part,  either  past  or  current; 
he  continues  to  draw  this  income  even  when  he  remains 
perfectly  idle.  It  cannot  be  replied  that  he  has  to  expend 
some  time  and  effort  in  keeping  his  canoes  in  repair;  for 
the  fishermen  using  them  must  make  good  this  expense. 
They  have  not  begun  to  pay  him  a  real  net  income  or  rental 
until  after  they  have  done  so.     The  net  income  which  he 


/ 


SPECIALIZATION    IN    BARTER  117 

enjoys  and  which  alone  is  properly  to  be  called  Interest  is 
what  they  pay  him  over  and  above  this  expense.  In  short, 
this  expense  in  maintaining  the  constancy  of  value  of 
capital,  its  depreciation,  must  be  paid  by  labor  before 
either  labor  or  the  capitalist  can  derive  any  benefit  from 
the  existence  and  use  of  the  capital. 

The  next  point  to  be  noted,  and  the  one  of  maximum 
significance,  Is  that  If  all  of  the  fishermen  were  equally 
equipped  with  canoes  no  net  rental  could  be  had  for  their 
hire.  Any  fisherman  temporarily  In  need  of  a  canoe, 
through  the  disability  or  absence  of  his  own,  occasionally 
might  wish  to  hire  one.  But  If  so,  It  always  develops  that 
he  can  borrow  one  without  hire.  There  are,  on  the 
average,  as  many  chances  of  some  neighbor  being  tem- 
porarily unable  to  use  his  own  canoe  as  there  are  of  some 
active  fisherman  being  temporarily  In  need  of  one.  There- 
fore It  results  that  the  rental  which  he  Is  called  upon  to 
pay  amounts  to  no  more  than  the  actual  depreciation  of 
the  capital  which  he  has  borrowed.  This  is  exactly  what 
takes  place  to-day  In  remote  seaside  communities,  whither 
the  summer-boarder  has  not  yet  penetrated  In  appreciable 
quantity:  the  rental  of  boats  is,  to  the  city-person's  Idea, 
absurdly  cheap.  But  it  is  not;  It  Is  merely  naturally 
cheap,  covering  depreciation  only.  The  opposite  situa- 
tion is  visible,  however,  so  soon  as  there  arrives  In  the 
community  a  substantial  addition  to  its  population  in  the 
shape  of  summer-boarders.  These  people  possess  no 
boats  whatever.  They  do  very  much  need  them,  how- 
ever, else  will  their  vacation  be  a  failure;  and,  while  they 
own  no  boats,  they  are  equipped  with  purchasing-power, 
as  are  the  active  fishermen.  Therefore  the  hire  of  boats 
rises  markedly,  and  the  mere  ownership  of  a  boat,  without 
any  expenditure  of  energy  in  using  it,  now  becomes  a  source 
of  current  income. 


ii8  THE    COST   OF   COMPETITION 

In  the  modern  fishing-community,  wherein  the  avocation 
may  not  be  followed,  in  certain  lines,  without  the  aid  of  a 
steamer  or  a  schooner,  the  situation  is  the  same.  The 
common  fisherman,  deckhand  or  pilot  is,  economically 
speaking,  like  the  summer-boarder.  That  is,  he  needs 
the  steamer  for  his  uses.  He  has  no  steamer  himself. 
He  has,  however,  wherewith  to  pay  others  for  the  use  of 
one :  not  immediate  purchasing-power,  but  the  productive 
power  of  strong  and  ready  muscles  instead.  Out  of  this 
current  productive  power  he  pays  a  current  hire  for  the 
use  of  the  steamer,  called  interest,  to  the  steamer-owner 
who  remains  idle  on  shore.  To  be  sure,  he  is  not  con- 
scious of  this  payment,  by  the  name  of  interest;  but 
it  is  made,  nevertheless.  What  he  calls  his  wages  is 
his  real  productivity  with  the  interest  on  the  steamer's 
valuation,  etc.,  deducted  before  it  is  returned  to  him  in 
cash. 

Therefore  it  must  be  obvious  that  the  interest  on  the 
use  of  capital,  which  General  Walker  typified  by  the 
rental-price  of  the  canoe,  is  in  reality  a  money-measure  of 
the  need  of  him  who  has  not,  as  perceived  and  enforced 
by  him  who  has.  It  is  plainly  a  direct  function  of  relative 
difference  in  wealth  and  in  need  between  the  several  indi- 
viduals or  classes  of  the  community.  It  must  sink  to 
zero  when  those  differences  become  zero. 

The  lessons  to  be  drawn  from  this  observation  are 
primarily  three  in  number,  viz. : 

( I )  There  is  no  possibility  whatever  of  all  individuals 
attaining  incomes  from  the  ownership  of  capital.  If  all 
citizens,  or  even  the  great  majority  of  them,  should  suc- 
ceed in  following  the  example,  too  often  self-extolled,  of 
the  "  self-made  "  man  and  accumulate  capitalism  to  an 
extent  equal  with  him,  the  immediate  result  would  be  that 


SPECIALIZATION    IN    BARTER  iig 

no  one  would  any  longer  draw  any  Income  In  the  shape  of 
interest,  dividends,  etc.  The  current  rate  of  Interest 
would  sink  to  zero.  However  fast  the  masses  may  suc- 
ceed In  accumulating  capitalism,  In  savings-banks  or  other 
form.  It  Is  only  to  the  degree  that  the  larger  capitalists 
accumulate  more  rapidly  than  they  that  Interest-rates 
(actual,  not  apparent)   may  be  maintained. 

(2)  Since  interest  is  drawn  in  complete  idleness,  after 
the  initial  effort  whereby  the  capitalism  was  hired  out  or 
"  invested  "  and  the  agreement  upon  the  interest-rate  was 
established,  it  can  in  no  sens,e  be  regarded  as  the  return 
to  the  capitalist  of  the  value  of  any  productive 
labor,  either  past  or  current,  upon  his  part.  The  past 
labor,  if  any,  of  acquisition  of  his  capitalism  Is  conserved 
to  him  in  his  ownership  of  the  principal  of  his  "  capital," 
which  he  can  liquidate  at  any  time  that  he  desires  his  pay 
for  that  labor.  Of  current  labor  on  his  part  there  is 
none;  he  works  only  when  his  capitalism  needs  reinvest- 
ment, which  is  just  when  it  fails  to  draw  to  him  an  income. 
This  income,  or  Interest,  therefore,  can  be  regarded  as 
nothing  else  than  a  bald  abstraction  by  the  capitalist,  from 
the  productive  labor  which  hires  and  uses  his  capital,  of  a 
portion  of  the  value  which  the  latter  produces,  which  is 
demanded  and  collected  solely  because  the  capitalist 
possesses  the  power  to  demand  and  collect  it. 

(3)  The  portion  so  abstracted  naturally  becomes,  by 
gravitation,  the  maximum  which  labor  can  pay  and  still 
have  left  to  itself  a  surplus,  in  the  form  of  wages,  which 
is  somewhat  greater  than  it  would  have  enjoyed  had  it 
refused  to  hire  the  capital  and  had  continued  in  hand-labor 
instead. 

If  it  be  said  that  herein,  at  last.  Is  the  justification  of 
capitalism :  that  It  merely  transfers  to  the  owner  of  the 
capital  the  productive  power  of  that  capital,  as  evidenced 


I20  THE    COST    OF    COMPETITION 

by  the  increased  productivity  of  labor  with,  as  compared 
to  without  it,  the  reply  is  fourfold,  viz. : 

(i)  What  potentiality  for  the  production  of  value  lies 
in  any  original  form  of  capital,  such  as  a  novel  or  useful 
invention,  over  the  methods  previously  prevailing  most 
obviously  belongs,  if  to  any  individual,  to  the  inventor. 
At  present  he  seldom  gets  it;  but  if  he  does  not,  the 
capitalist  certainly  cannot  step  into  his  shoes  and  claim  it 
upon  the  same  grounds. 

(2)  What  potentiality  for  the  production  of  value  lies 
in  later  replicas  of  the  original  invention,  by  whomever 
created,  is  immediately  visible  in  the  market-price  of  these 
duplications;  that  is  to  say,  in  the  principal-value  of 
the  capital.  The  only  money  which  can  honestly  be 
demanded  upon  the  basis  of  this  claim  is  a  single  payment 
of  this  price.  If  the  law  is  to  prevent  swindling,  by  re- 
peated collections  from  the  community  for  a  single  value 
produced,  it  should  permit  the  capitalist  to  be  paid  for  the 
creation  of  his  capital  only  once.  That  is  the  only  pay- 
ment which  it  permits  to  any  other  sort  of  creative  labor, 
no  matter  how  continuously  productive  to  the  community 
the  fruit  of  that  labor  may  ever  afterwards  be.  That  is, 
it  should  protect  the  capitalist  in  the  ownership  of  his 
principal;  but  all  current  payments  which  he  may  receive 
for  its  use,  over  and  above  actual  depreciation,  should  be 
compelled  by  law,  in  ordinary  justice,  to  count  as  pay- 
ments in  purchase  of  the  capital.  This  is  equivalent  to 
saying  that  the  true  interest  should  be  zero.  In  other 
words,  the  claim  with  which  this  paragraph  is  headed,  if 
logically  analyzed,  furnishes  no  legitimate  explanation  of 
interest. 

Standard  Oil  dividends,  for  instance,  are  reported  to 
have  ranged  as  high  as  42  per  cent,  per  annum.  Dis- 
counting all  considerations  of  watered  or  otherwise  inflated 


SPECIALIZATION    IN    BARTER  121 

valuations  of  stock,  how  many  times  must  the  original 
labor  which  was  expended  in  producing  the  real  capital, 
which  this  theory  burdens  with  the  responsibility  for  all 
of  this  interest,  have  been  reimbursed  for  its  exertions, 
since  1875?  And  still  this  labor  is  not  paid — according 
to  the  argument  that  it  is  the  original  creation  of  the 
capital  which  justifies  the  drawing  of  interest.  It  has  not 
begun  to  be  paid.  It  still  holds  the  full  value  of  the 
principal  as  certificate  of  this  work  done  so  long  ago. 
For  this  work  it  will  acknowledge  full  payment  only 
when,  in  addition  to  all  of  these  payments  of  interest,  the 
principal  is  liquidated.  On  all  other  stocks,  usually  earn- 
ing lower  rates  of  interest,  although  the  absurdity  of 
the  claim  may  not  be  so  palpable,  the  injustice  is  just  as 
pure. 

(3)  This  point  can  be  brought  out  still  more  clearly  if 
there  be  introduced  into  the  elementary  illustrative  case 
still  another  step  in  specialization,  one  which  is  now  an 
almost  universal  fact  in  modern  industry :  the  one  between 
the  real  production  of  capital  and  its  mere  idle  ownership. 
We  may  imagine  our  canoe-builder,  for  instance,  become 
so  prosperous  that  he  can  afford  to  sit  in  the  shade  and  to 
hire,  with  a  portion  of  the  rentals  drawn  from  the  canoes 
already  in  use,  canoe-builders  and  repairers  to  work  for 
him  daily.  These  men  receive  wages  for  their  daily 
work.  It  is  ordinarily  supposed  that,  in  simple  justice, 
they  receive  the  value  which  they  produce — this  value 
being,  as  in  any  case,  the  gross  value  created  minus  the 
cost  of  the  "  central-office  "  direction  and  accountancy  If 
so,  then  the  indebtedness  for  the  original  creation  of  the 
capital  is  canceled  forever  there  and  then,  and  no  further 
just  claim  for  payments  of  any  sort  may  ever  after  be 
based  thereon.  If,  on  the  other  hand,  interest  be  a  sort  of 
deferred  payment,  to  the  producer  of  capital,  of  that  por- 


122  THE    COST    OF   COMPETITION 

tlon  of  the  value  which  he  created  which  was  not  paid  to 
him  at  the  time  when  the  capital  was  created,  then  these 
hired  creators  of  capital  are  not  receiving  just  wages  at 
the  hands  of  their  employer;  he  must  be  holding  back 
something  of  their  value  produced,  and  when  it  later  finds 
its  way  into  his  hands  he  is  bound  to  turn  it  over  to  them. 
He  cannot  pose  otherwise  than  as  a  trustee.  If  he  holds 
back  this  portion  of  their  natural  wages  and  does  not  later 
turn  it  over  to  them,  then  is  this  merely  another  way  of 
transferring  value  from  Its  producer  to  one  able  to  acquire 
it  by  force  of  circumstance;  that  is  to  say,  the  employer 
assumes  toward  his  employee  the  same  attitude  as  the 
armed  hunter  did  in  bargaining  with  the  unarmed  fisher- 
man. It  is  needless  to  say  that  actual  interest-payments 
do  not  pretend  to  follow  these  lines  of  disinterested 
trusteeship  at  all.  They  therefore  must  not  lay  claim  to 
the  principles  lying  back  of  them. 

(4)  The  final  point  of  significance  as  to  the  nature  of 
interest  is  that  the  great  bulk  of  capitalism  upon  which 
interest  is  now  being  drawn  never  was  created  by  the 
capitalist  at  all.  It  was  won  by  barter  or  was  inherited. 
Therefore  the  question  as  to  the  true  nature  of  the  capital- 
ist's proper  income:  interest, — whether  rightful  or  the 
opposite, — turns  upon  the  value  to  the  community  of  the 
Capitalist's  mere  suzerainty  of  these  replicas  of  Inven- 
tion's novelty,  which  were  produced  by  Labor  and  acquired 
into  legal  ownership  by  the  Capitalist  by  methods  yet  to 
be  explored. 

All  of  these  considerations  unqualifiedly  identify  capital- 
ism and  the  collection  of  interest  as  a  species  of  barter. 
The  points  of  coincidence  whereby  this  identity  are  estab- 
lished are: 

(i)    It  has  nothing  to  do  with  Production.      Capital 


SPECIALIZATION    IN    BARTER  123 

has,  but  Capitalism  has  not;  and  the  capital  is  furnished 
by  Labor,  not  by  the  Capitalist. 

(2)  Its  amount  is  determined  and  its  payment  assured 
solely  by  might,  of  legal  possession  on  the  part  of  the 
capitalist  and  by  force  of  need  on  the  part  of  the  bor- 
rower, the  laborer, 

(3)  It  universally  tends  to  expand  against  its  ultimate 
limit:  the  ability  of  the  user  to  make  the  interest-payments 
and  still  earn  wages  slightly  better  than  what  he  might 
earn  without  the  capital. 

Therefore  capital  and  interest-drawing  will  hereafter 
be  regarded  as  merely  one  form  of  barter  or  competition, 
and  will  be  understood  as  included  within  those  terms.  In 
capitalism  the  competition  is  between  classes,  the  capitalist- 
class  vs.  the  borrowing  (or  producer)  class,  instead  of 
between  trades  or  between  individuals,  as  were  the  two 
forms  of  competition  already  discussed.  We  shall  con- 
trast the  former  with  the  latter  by  the  terms  vertical  and 
horizo?ital  competition,  respectively;  but  except  for  this 
difference  in  relative  position  of  the  contending  parties  the 
two  forms  of  competition  are  identical  in  nature. 

These  statements  have  not  been  founded  at  all,  it  is  to 
be  noted,  upon  any  denial  that  labor  is  better  off  with 
capital,  even  under  capitalism,  than  it  was  previously.  It 
merely  denies  the  self-righteous  explanation  of  interest  as 
an  institution  warranted  by  considerations  of  justice.  The 
existence  of  capital, — the  material  tools  used  by  the  pro- 
ducing laborer, — is  warranted  by  its  beneficent  effect  upon 
general  and  individual  productivity.  The  existence  of 
capitalism  Is  not  warranted  by  any  consideration  except 
that  we  do  not  know  how  to  get  rid  of  It.  That  the  incre- 
ment in  productivity  due  to  the  use  of  capital  should  go 
back  to  the  capitalist,  either  In  whole  or  In  appreciable 
part,  as  a  matter  of  justice.  Is  denied  In  toto.      It  comes 


124  THE    COST    OF    COMPETITION 

back  to  the  capitalist,  in  large  part,  simply  because  he  can 
make  it  come  back.  All  pretense  that  he,  purely  as  a 
capitalist  and  not  as  a  laborer  specialized  into  superintend- 
ence, either  produces  this  increment  himself,  or  that  he 
himself  aids  labor  to  produce  it,  is  absolutely  without 
foundation — as  will  appear  even  more  clearly  as  the  analy- 
sis develops. 

As  with  many  other  pairs  of  activities  between  which 
sharp  contrast  is  to  be  drawn,  these  of  the  creation  and  the 
ownership  of  capital,  or  of  the  use  and  the  ownership,  may 
both  find  expression,  at  times  and  in  part,  within  a  single 
individual.  Such  an  one  may  devote  a  portion  of  his 
time  to  each  of  the  two;  or  here,  since  one  "  activity  "  is 
idleness, — the  activity  consisting  solely  in  the  consumption 
of  wealth  produced  by  the  activity  of  others,  a  negative 
activity, — all  of  his  time  may  be  absorbed  in  productive 
labor,  for  which  he  enjoys  full  return  In  the  form  of 
"  wages,"  while  the  income  from  his  ownership  of  capital 
comes  quite  in  addition  to  that. 

If  it  be  urged  that  the  capitalist  runs  constant  risk  of 
not  being  able  to  obtain  profitable  investment,  or  to 
liquidate  his  capital  into  its  orglnal  money-value  upon 
need,  owing  to  constant  fluctuations  In  commercial  valu- 
ations, the  reply  is  threefold: 

(i)  The  individual's  voluntary  risk  Is  of  no  value  to 
the  community  and  there  Is  no  reason  why  it  should  reim- 
burse him  therefor.  Piracy  runs  risks,  in  prosecuting  its 
business  upon  the  high  seas, — of  a  gallows  erected  by  its 
own  lawlessness.  So  does  anarchy,  in  handling  dynamite. 
The  burden  of  proof  remains  upon  the  capitalist  to  show 
how  his  risk  aids  the  community.  It  is  of  his  own  making 
and  his  own  choosing.  If  he  had  sold  his  capital  for  cash 
at  the  time  of  its  first  creation,  not  attempting  to  keep  It 
for  the  sake  of  prying  interest  out  of  other  people's  pockets 


SPECIALIZATION    IN    BARTER  125 

with  It,  there  would  have  been  incurred  no  risk  of  losing 
it.  The  risk  would  then  have  been  distributed  over  the 
entire  community  and  have  become  insensible. 

(2)  The  risk  is  not  so  great  but  that  (a)  it  is  over- 
balanced by  the  average  rate  of  interest,  so  that  there 
always  results  to  the  capitalist,  in  the  long  run,  a  hand- 
some net  income;  and  but  that  (b)  capitalism  steadily 
accumulates;  that  is,  that  the  capitalist  enjoys  the  situation 
and  constantly  seeks  to  accentuate  it. 

(3)  The  risk  is  incurred  solely  because  it  is  the  aim 
of  all  barter  to  fluctuate  prices,  and  because  all  capitalism 
and  all  barter  are  operated  upon  the  principle  of  cannibal- 
ism. That  is  to  say,  if  one  capitalist  should  find  at  any 
time  that  his  capitalism  had  depreciated,  or  flown  alto- 
gether, it  could  be  only  because  he  had  taken  too  heavy  a 
pirate's  risk  and  attacked  too  powerful  or  too  empty  a 
galleon,  or  because  some  other  capitalist  or  barterer  had 
caught  him  napping  and  had  gobbled  him  up.^ 

1  If  the  question  which  must  be  answered  ultimately:  What  is  it  which 
determines,  in  actual  life,  which  individual  is  to  be  the  capitalist,  absorb- 
ing interest,  and  which  the  non-capitalist,  paying  it? — if  this  question  is 
to  be  given  its  preliminary  answer  here,  that  answer  may  be  founded 
upon  what  has  just  been  said.  With  the  great  majority  of  self-respecting 
individuals  of  cultivated  taste,  barter  and  capitalism  still  savor  far  too 
strongly  of  the  methods  and  manners  of  eighteenth-century  piracy,  not  to 
mention  the  cannibalism  of  a  still  earlier  period,  to  permit  them  to  enter 
into  it  with  that  zest  which  alone  commands  success.  We  have  outgrown 
the  institution  barter,  not  only  as  a  unit-nation,  but  as  a  question  of  indi- 
vidual taste.  Such  individuals,  therefore,  choose  instead  either  honest, 
honorable  toil  or  some  one  of  the  equally  honorable  professions.  That 
these  classes  include  the  ablest  and  most  valuable  citizens  the  country 
possesses,  whether  measured  by  economic  or  by  ethical  standards,  cannot 
be  proven  here.  But  the  question  is  not  dodged  nor  minimized,  and  is 
given  full  treatment  later,  in  its  proper  place.  In  fact,  since  it  is  the  test 
of  value  of  all  studies  in  sociology  that  they  shall  reveal  the  destiny  of 
the  individual,  it  is  the  main  object  of  this  book,  ultimately,  to  bring  out 
this  very  fact:  that  our  most  valuable  citizens  are  amongst  those  who  fail 
to  accumulate  capitalism. 


126  THE   COST   OF   COMPETITION 

The  situation  in  the  illustrative  community  of  fisher- 
men, after  the  advent  of  capital  and  the  capitalist,  is  there- 
fore four-sided.  First  comes  Labor-Specialized-upon- 
Fishing,  which  can  produce  more  with  the  canoe  than  with- 
out it.  Next  comes  Invention,  which  has  created  by  past 
effort  the  Idea  which  constitutes  the  difference  in  value  of 
Labor's  productivity  with  and  without  the  canoe.  Inven- 
tion is  therefore  one  form  of  specialized  productive  labor: 
Labor-Specialized-upon-Invention.  Next  comes  Labor- 
Specialized-upon-Canoe-building,  which  would  ordinarily, 
or  in  natural  justice  and  freedom,  exchange,  with  permis- 
sion from  the  Inventor  or  after  proper  payment  of  his 
value-produced  to  him,  with  Labor-Specialized-upon-Fish- 
ing  at  the  natural  price.  Finally  comes  the  Capitalist, 
producing  nothing  currently,  nor  trying  to  do  so,  but  own- 
ing replicas  of  Invention's  novelty,  for  the  use  of  which 
Labor  prefers  to  give  him  the  bulk  of  the  increased  value 
produced  with  its  aid  (instead  of  giving  it  to  Invention, 
who  is  unable  to  enforce  its  payment  to  him)  rather  than 
to  get  none  of  it  by  refusing  to  use  the  canoes  at  all. 

The  natural  and  the  artificial  relations  of  these  four 
individuals  or  classes  Is  shown  in  Figs.  3  and  4  respectively. 
In  them,  P^  represents  productive  labor  specializing  upon 
the  transformation  of  the  raw  material  itself  Into  finished 
articles  fit  for  human  consumption;  P2  represents  produc- 
tive labor  specializing  upon  the  supply  of  the  tools,  or 
capital,  used  therein;  I  represents  invention  and  C  capital- 
ism. Fig.  3  shows  the  first  three  In  their  natural  associa- 
tion, each  credited  with  the  value  he  produces  and  coopera- 
tively exchanging  this  value  with  the  others  in  order  to 
produce  a  complete  net  result  for  life  and  progress.  If 
we  call,  for  the  purposes  of  Illustration,  the  proportion  of 
the  selling-valuation  of  that  net  result  which  is  accorded 
to  labor,  as  wages,  as  the  net  result  itself,  neglecting  for 


SPECIALIZATION    IN    BARTER  127 

the  time  any  question  as  to  their  actual  identity,  then  it 
may  be  said  that  this  is  exactly  what  occurs  in  every  fac- 
tory possessing  a  tool-maker  and  a  designer.  Pi  is  the 
operative,  P2  is  the  tool-maker  and  I  is  the  designer  for 
both.  Under  the  guidance  of  the  Central  Office,  which 
keeps  a  record  of  the  average  productivity  of  each,  they 
exchange  cooperatively,  upon  the  basis  of  natural  price, 
with  no  consciousness  of  either  capitalism  or  barter  in  con- 
nection therewith.  And  the  Central  Office  is  itself  a  part 
of  the  wage-earning  labor-body,  a  portion  of  Pj.  In  so 
far  as  all  questions  of  human  nature  are  concerned,  it  is 


Natural  Coordination 


not  only  true  that  such  method  of  exchange  is  perfectly 
feasible,  but  it  is  an  existent  fact  that  it  is  the  only  one  now 
known  in  the  daily  lives  of  some  ninety  per  cent,  of  the 
individuals  now  carrying  on  all  productive  industry. 

Bringing  the  question  of  capitalism  again  into  the  situa- 
tion, however,  it  is  to  be  recalled  that  capitalism  intervenes 


128 


THE    COST   OF   COMPETITION 


between  the  three,  although  they  are  quite  unconscious  of 
it  in  their  daily  tasks,  in  every  exchange  which  they  make 
with  each  other  beyond  the  factory-walls.  Neither  di- 
rectly nor  indirectly,  visibly  nor  obscurely,  do  they  barter 
with  each  other;  but  at  every  such  exchange  between  them 
arises  the  opportunity  of  the  Capitalist  to  barter,  to  put 
the  interest-extractive  pressure  upon  them  or  upon  the 
public:  with  what  effectiveness,  although  little  time  is 
visibly  spent  at  it,  will  be  developed  as  the  analysis  pro- 
ceeds.    These    actual    relations    are    shown   by    Fig.    4. 


Fig.  4.  Coordination   Distorted   by  Capitalism 

Here  capitalism  intervenes  between  one  portion  of  labor 
and  another,  or  between  either  and  invention,  in  whatever 
exchange  between  them  is  essential  to  industry  and  pro- 
gress. The  exchange  takes  place  anyhow;  it  must,  or  the 
specialization  and  cooperation  of  the  three  must  cease. 
But  it  is  now  warped  from  its  naturally  straight  lines  of 


SPECIALIZATION    IN    BARTER  129 

communication  so  as  to  pass  within  the  control  of  capital- 
ism. As  it  does  so  the  value  of  the  exchange  is  tapped 
for  the  income  which  capitalism  enjoys:  Interest. 

Summary.  In  view  of  all  these  considerations  the  fol- 
lowing principles  of  equity  are  laid  down  as  axiomatic: 

( 1 )  The  only  return  honestly  earned  in  the  original 
production  of  capital  is  that  reserved  to  any  other  form  of 
productive  labor,  viz. :  the  value  produced.  This  once 
conserved  to  the  producer  by  the  community,  in  a  single 
net  payment  for  a  given  lump  of  material  capital  pro- 
duced, any  demand  for  a  second  or  a  greater  payment,  or 
for  a  series  of  current  payments,  such  as  interest,  amounts 
to  extortion  pure  and  simple, — under  what  pressure  will 
be  seen  later. 

(2)  The  gain  in  productivity  of  labor  due  to  the  exist- 
ence of  capital,  over  what  It  was  without  it,  if  to  be  divided 
by  Labor  with  anyone,  should  go  In  part  to  the  Inventor, 
as  to  another  form  of  productive  labor;  but  the  question 
as  to  what  portion  should  go  to  each  is  here  deliberately 
neglected,  as  Irrelevant  to  the  main  question. 

(3)  The  doctrine  that  Interest  is  earned  by  current 
service  performed  for  society  by  the  Capitalist  will  not 
bear  Investigation.  In  the  first  place,  the  Interest  Is  paid 
only  during  those  periods  when  the  Capitalist  Is  Idle;  and 
value  cannot  be  produced,  and  if  not  produced  is  not 
earned,  by  idleness.  In  the  second  place,  the  ownership 
of  capital  is  retained  by  the  Capitalist  at  his  own  behest, 
as  a  privilege,  solely  for  the  purpose  of  drawing  the  Income 
under  discussion,  and  not  as  a  patriotic  or  philanthropic 
piece  of  self-sacrifice.  For  instance,  the  chief  source  of 
our  present  municipal  corruption  Is  the  enormous  sums 
which  the  Capitalist  is  willing  to  spend  for  the  privilege 
of  owning  the  productive  capital  used  by  labor  in  main- 


I30  THE    COST    OF    COMPETITION 

taining  urban  transportation,  the  supply  of  gas  and  elec- 
tricity, and  similar  public  services.  If  the  canoe-owner 
had  so  much  desired  to  benefit  either  the  individual  fisher- 
man or  the  community  with  his  canoes  he  would  have  sold 
them  to  the  one  or  the  other  for  their  equivalent  in  fish,  as 
soon  as  built;  for  he  would  then  have  received,  in  consum- 
able form,  the  full  value  of  his  labor,  the  value  produced, 
and  could  therefore  hardly  pose  as  an  altruist;  while  the 
utmost  service  which  he  could  perform  for  society  and  for 
which  he  could  equitably  ask  pay  had  then  been  done. 

In  actual  life  to-day  the  same  thing  is  true :  the  greatest 
service  which  the  capitalists  might  do  for  society  would  be 
to  sell  their  capital  to  the  community  Immediately,  Instead 
of  holding  It  for  the  purpose  of  drawing  Interest,  and  to 
cease  to  be  capitalists.  But  this  Is  the  last  thing  they  wish 
to  do.  If  Mr.  Carnegie  would  only  cease  presenting  to 
the  people,  In  the  form  of  libraries,  a  portion  of  the 
millions  which  his  ownership  of  his  steel-works  pries  out 
of  them,  and  would  give  or  sell  to  them  the  steel-works 
Instead,  he  might  have  a  better  chance  than  now  promises, 
at  the  needle's  eye  in  that  dread  hour  which  all  must  meet: 
when,  as  he  says,  to  be  rich,  to  own  capitalism,  is  to  be 
disgraced. 

It  may  be  replied  to  this  that  It  were  futile  for  Mr. 
Carnegie  to  so  present  his  steel-works  to  the  American 
people,  for  their  value  would  soon  be  dissipated  in  the 
hands  of  the  politicians.  What  Is  the  objection,  then,  to 
Mr.  Carnegie's  presenting  himself  to  his  country,  along 
with  his  steel-works?  He  has  handled  them  most  effec- 
tively, in  the  past,  for  the  purpose  of  raising  and  maintain- 
ing the  prices  of  steel, — that  being  the  sole  measure  of 
success  in  private  capitalism.  Why  could  he  not  be 
trusted  to  handle  them  just  as  effectively,  In  the  future, 
for  the  depression  of  steel-prices  to  the  natural  cost  of 


SPECIALIZATION    IN    BARTER  131 

production  ? — were  it  only  once  understood,  in  the  minds 
of  all  of  us,  that  the  works  were  to  be  owned  by  and  run 
in  the  interests  of  the  American  people,  and  that  his  sole 
pride  of  success  lay  in  accomplishing  that  public  good  to 
the  utmost!  Could  we  not  well  afford  to  voluntarily  pay 
him  then  a  fixed  annual  salary  of  $1,000,000,  twenty  times 
what  we  pay  our  national  executive,  one-twentieth  of  what 
Mr.  Carnegie's  capitalized  steel-works  now  squeeze  out  of 
us  by  force?  Could  we  not  then  build  our  own  libraries, 
to  fifty  times  the  present  scale  of  construction,  and  cement 
them  into  our  community-life  with  a  much  better  grade  of 
public  self-respect  than  now?  Could  we  not  then  live  upon 
that  modest  income  in  sufficient  comfort,  and  with  a  sus- 
taining honor,  finding  in  both  a  fair  recompense  for  doing 
what  Lincoln  did  for  a  few  thousands  only,  and  what 
Washington  did  for  "  the  empty  honor  "  alone,  viz. :  to 
serve  his  country  with  a  single  eye  to  its  welfare  as  a 
whole?  When  Mr.  Carnegie  shall  have  honestly  an- 
swered these  questions  to  himself  he  need  no  longer  dread 
the  straight  and  narrow  passage  through  the  needle's  eye. 
He  will  have  already  passed  through,  and  with  what  tra- 
vail none  but  he  shall  ever  know. 

(4)  The  immorality  of  the  practice  of  interest-drawing 
is  obvious  from  the  premium  which  it  places  upon  idleness. 
The  privilege  of  drawing  interest  never  persuaded  any- 
one, successfully,  into  productivity.  It  persuades  them 
directly  away  from  productivity,  Into  barter;  and  when 
barter  has  accumulated  enough,  away  from  barter  Into 
idleness.  No  one  who  has  spent  his  life  in  production 
draws  an  appreciable  income  In  the  form  of  interest.  Not 
even  Inventors,  according  to  Mr.  Edison,  ever  make 
money  by  inventing;  they  make  it,  if  at  all,  as  business 
men,  by  successful  barter  over  their  inventions.  Every 
existing  Income  of  appreciable  size  which  consists  of  inter- 


132  THE    COST    OF    COMPETITION 

est  upon  invested  capital  is  drawn  from  a  fortune  originally 
accumulated  by  barter. 

The  simple  fact  is,  the  exaction  of  Interest  from  Labor 
for  the  use  of  capital  is  a  parasitical  process  attaching  it- 
self to  the  Exchange  between  Labor-Specializing-upon- 
Tool-making  and  Labor-Specializing-upon-Tool-using, 
exactly  as  Barter  is  a  parasite  upon  exchange  between 
labor  using  one  sort  of  tools  and  raw  material  and  labor 
using  another  sort.  The  characteristics  of  the  two  para- 
sites are  exactly  alike.  Every  generalization  or  law  pre- 
viously stated  or  hereinafter  to  be  deduced  in  relation  to 
barter  holds  equally  true  of  the  drawing  of  interest  from 
the  idle  ownership  of  capital.  The  pressure  which  is  put 
upon  productive  labor  to  give  up  this  strength  to  the  para- 
site is  exerted  in  a  different  fashion,  to  be  sure,  but  the 
difference  is  in  form  only.  In  barter  it  falls  directly  from 
the  barterer  upon  the  laborer;  in  capitalism  it  falls  indi- 
rectly, and  therefore  more  obscurely.  But  it  is  the  same 
force  in  each  case. 

Rent.  Into  exactly  this  same  classification,  too,  falls  the 
income,  scientifically  defined  as  rent,  which  is  secured  by 
the  idle  ownership  of 

Land 

Land  possesses  value  for  the  purposes  of  either  manu- 
facture or  residence,  quite  aside  from  any  artificial  im- 
provements which  may  have  been  imposed  thereon  by 
labor,  in  either  or  both  of  two  ways: 

( 1 )  By  its  geographical  or  topographical  conforma- 
tion; 

(2)  By  its  relation  to  the  artificial  improvements  and 
the  current  exertions  of  Labor  upon  adjacent  land. 


SPECIALIZATION    IN    BARTER  133 

Neither  of  these  items  can  be  altered  by  any  effort  upon 
the  part  of  the  occupier  of  the  land.  The  second  one  can 
be,  and  normally  always  is,  markedly  altered  by  labor,  but 
it  is  by  that  of  the  other  members  of  the  surrounding  com- 
munity. Therefore  there  is  no  reason  why  either  of  these 
two  values  should  be  conserved  to  the  occupier,  as  his 
property,  by  law.  Thus,  to  manufacture  iron  is  needed 
a  locality  whither  coal  and  ore  can  easily  be  brought  and 
whence  iron  can  easily  be  shipped:  all,  presumably,  by 
water.  This  facility,  aside  from  any  improvements  for 
navigation  attained  by  the  expenditure  of  labor  and  which 
would  constitute  capital.  Is  unalterable.  The  value  which 
attaches  to  a  locality  in  view  of  these  facilities  is  quite  dis- 
tinct from  the  value  due,  for  instance,  to  contiguity  to  a 
great  city;  for  this  latter  value  is  markedly  alterable  by 
those  who  build  the  city,  whereas  the  former  is  not.  The 
larger  and  the  nearer  the  city  is  built  to  the  locality  in 
question,  the  greater  becomes  the  value  of  the  latter  as 
land;  yet  in  the  production  of  this  value  the  iron-manufac- 
turer, as  such,  could  have  no  part. 

Reverting  to  the  law  of  decreasing  returns,  it  will  be 
remembered  that  the  greater  the  population  supported 
upon  a  given  territory  by  the  parallel  exertion  of  similar 
effort,  the  poorer  would  become  the  later  portions  of  land 
drawn  into  service.  The  latest  comer  would  take  the 
poorest  land  because  it  were  the  best  available.  But  it  is 
to  be  plainly  noted  that  standards  of  ethics  take  no  cogni- 
zance of  priority  of  birth  or  of  occupation  by  force.  The 
law  of  the  land  does,  it  is  true,  but  It  is  justified  therein  by 
no  standards  of  equity  recognized  by  the  broadest  Inter- 
pretations of  the  Christian  faith.  To  push  in  ahead  of 
the  weak,  and  then  to  claim  protection  as  one  in  the  right. 
Is  the  policy  of  ruffianism  or  of  thoughtless  childhood,  but 
not  of  Christian  men  and  women.     So  far  as  natural  law 


134  THE    COST    OF    COMPETITION 

is  concerned,  on  the  other  hand,  the  true  method  is  always 
just  the  opposite:  the  later  form  of  life  is  constantly  and 
rightfully  overruling  and  displacing  the  earlier,  securing 
and  utilizing  its  opportunities  by  newer,  better,  higher 
methods  of  life.  As  the  Scripture  saith:  *'  And  the  last 
shall  be  first." 

Therefore,  the  least  which  society  can  properly  do  in 
this  connection  is  to  recognize  that  the  lateness  of  arrival 
of  him  to  whom  is  allotted  the  poorest  land  is  an  event 
which  cannot  in  equity  be  either  charged  against  him  or 
credited  to  anyone  else.  Whatever  it  may  bring  to  the 
community,  of  good  or  bad,  is  a  community-event,  to  be 
shouldered  by  it  as  a  unit. 

Or,  to  take  a  more  religious  view  of  the  case,  mankind 
finds  itself  relying  upon  the  land  for  life  as  a  fact  of 
God's  creating.  God  gave  to  man  the  land,  to  dwell  upon 
in  peace  and  justice.  Therefore,  since  the  Christian  faith 
makes  no  distinction  between  individuals,  in  its  value  each 
possesses  an  equal  right,  as  a  birth-right. 

From  either  standpoint,  the  only  rightful  basis  for  the 
legal  distribution  of  land-values  is  to  consider  each  citizen, 
by  right  of  birth,  as  an  equal  share-holder  in  the  value  of 
the  total  land  available,  although  its  actual  occupation 
may  be  taken  up  and  enjoyed  by  the  different  members  of 
the  community  in  the  most  diverse  fashion.  Its  average 
productive  power  per  acre  per  capita  would  then  constitute 
the  natural  rent  of  land,  or  the  value  assignable  to  each 
citizen  as  his  share.  Since  each  enjoys  the  use  of  land  to 
some  other  quantity  or  value  than  this, — greater  or 
smaller,  at  his  pleasure, — if  its  current  productive  value 
be  greater  than  the  natural  rent,  he  owes  the  surplus  to  the 
community;  if  it  be  less,  the  community  owes  him  the  dif- 
ference. These  two  sums  of  debits  and  credits  are  of 
course  equal,   and  balance  each  other.     The  community 


SPECIALIZATION    IN    BARTER  135 

stands  merely  as  a  clearing-house  for  the  transfer  of  value 
from  those  who  enjoy  more  than  their  proper  share  of 
land-value  to  those  who  enjoy  less.^ 

Upon  this  natural  relation  between  the  community  and 
the  individual  in  regard  to  land  is  superimposed  the  arti- 
ficial device  called  the  legal  ownership  of  land.  In  its 
relation  to  the  natural  attitude  between  citizen  and  citizen 
it  stands  in  exactly  the  same  attitude,  and  exists  for  exactly 
the  same  purpose,  as  does  barter  in  regard  to  one  sort  of 
exchange  and  capitalism  to  another:  as  a  parasite.  For 
natural  rent  is,  of  course,  merely  one  form  of  Exchange: 
that  between  Labor  Specializing  upon  Land-using  and 
Labor  Specializing  upon  Tool-using.  Since  land,  as  well 
as  labor,  produces  value,  exchange  is  necessary  in  order  to 
circulate  that  value  throughout  the  community.  The 
only  natural  and  equitable  method  of  effecting  this  ex- 
change is  by  natural  rent.  But  in  this  exchange  selfish- 
ness sees  again  an  opportunity  for  the  gain  of  wealth  with- 

2  It  is  this  natural  rent  for  land  which  underlies  Mr.  Henry  George's 
single-tax  plans.  As  to  the  practicability  of  those  plans  for  attaining  the 
payment  of  a  natural  rent  in  actual  life,  or  of  any  substitute  plans,  the 
writer  wishes  to  raise  no  question  whatever  at  present.  He  wishes  merely 
to  point  out  the  existence  of  such  a  rent,  as  the  only  natural  and  just  one, 
whether  practicable  or  not,  and  as  the  only  one  upon  which  can  be  based 
an  accurate  analysis  of  the  equities  and  inequities  of  modern  industry. 

To  grasp  this  clearly  it  is  necessary  to  point  out,  as  Mr.  George  did  not, 
that  the  average  net  rent  of  the  community,  viewed  in  this  way,  must  be 
zero.  That  is,  since  the  advantage  of  using  land  of  high  value  does  not 
stay  in  the  hands  of  the  user,  half  the  community  would  choose  to  occupy 
land  of  inferior  value  and  to  receive  from  the  other  half,  occupying  the 
more  valuable  land,  their  share  of  its  productivity.  The  former  half 
would  "pay"  a  negative  rent. 

The  whole  proposition  depends  upon  a  recognition  of  the  principle  that 
the  land  (not  its  improvements)  belongs  to  the  community  and  cannot,  by 
any  distortion  of  the  idea  of  equity,  really  "belong"  to  any  individual:  a 
principle  so  axiomatic  in  its  fundamental  justice  that  It  receives  to-day 
practically  universal  acceptance,  although  the  practicability  of  incorporat- 
ing it  into  workable  statute  law  is  almost  as  widely  rejected. 


136  THE    COST    OF    COMPETITION 

out  the  labor  of  creating  it,  by  the  taxation  of  exchange. 
By  creating  a  legal  fiction  called  a  title  to  the  land  it  is 
able  to  distort  the  payments  for  land-use  away  from  the 
natural  rent  into  a  greater  commercial  rent,  and  to  thus 
divert  into  its  own  pocket  the  difference.  This  last  is  the 
maximum  which  Labor-upon-Land  can  consent  to  pay  and 


Fig.  5.  Natural  Coordination 

still  derive  a  net  benefit  from  the  land  sufficient  to  persuade 
it  to  continue  tenancy. 

In  thus  securing  something  for  nothing  and  in  thus 
"  charging  all  the  traffic  will  bear,"  landlordism  is 
exactly  like  any  other  sort  of  capitalism;  and  both  are  one 
form  of  barter.     Between  capital  and  land,^  both  of  them 

3  Upon  this  distinction  between   land   and  capital:    that  one  is  made  by 
God  and  the  other  by  man,  Mr.  George  bases  all  of  his  distinctions  be- 


SPECIALIZATION    IN    BARTER 


137 


material  things, — one  being  artificial  and  the  other  nat- 
ural,— there  is  a  wide  economic  difference,  to  be  sure. 
Between  capitalism  and  landlordism,  both  of  them  legal 
artifices,  there  is  no  difference  whatever,  either  in  principle, 
method  or  result. 


Fig.    6.  Coordination    Distorted    by   Capitalism   and 
Landlordism 

To   illustrate   this    relation,    Figs.    3    and   4   are    here 
expanded  into  Figs.  5  and  6,  which  give  respectively  the 


tween  landlordism  and  capitalism.  From  it  he  deduces  all  of  his  conclu- 
sions as  to  the  former  being  the  source  of  all  of  our  social  evils.  That 
Mr.  George  is  right  in  condemning  landlordism  I  am  very  glad  to  uphold. 
In  fact,  to  his  clear-headed  work  up  to  this  point  I  am  myself  much  in- 
debted for  a  correct  start  through  the  maze.  But  to  the  remainder  of 
his  conclusions  this  entire  volume  takes  the  broadest  exception. 


138  THE    COST    OF    COMPETITION 

natural  and  the  artificial  relations  in  exchange  between 
labor  specialized  in  different  directions  when  the  questions 
of  land  and  landlordism,  as  well  as  capital  and  capitalism, 
are  added  to  the  question.  In  them,  L  represents  land- 
value  and  R  commercial  rent  or  landlordism;  the  other 
signs  are  used  as  In  Figs  3  and  4.  The  same  distortion 
of  the  natural  path  connecting  land  with  labor  in  exchange, 
so  as  to  lead  it  within  the  control  of  landlordism,  occurs 
here,  as  is  shown  (In  both  pairs  of  figures)  between  the 
Invention  and  production  of  capital  and  the  labor  which 
uses  it.  Both  of  the  former  can  reach  the  Labor  engaged 
In  making  actual,  consumable  commodities  only  through 
Capitalism;  the  Labor  using  land  can  reach  any  of  them 
only  through  Landlordism. 

Before  further  progress  can  be  made  in  the  analysis  of 
social  energetics  a  summary  of  what  has  been  accomplished 
must  be  presented.  In  the  form  of  a  series  of  definitions. 
Those  of  Production  (see  page  28)  and  Barter  (see  pages 
69,  73  and  95)  are  not  repeated  here. 

Land-value  or  Natural  Rent  Is  definable  as  the  cur- 
rent ability  of  a  given  piece  of  ground,  due  {a)  to  its 
topography  and  {b)  to  its  geographical  relation  to  the 
labors  of  the  community,  to  support  life.  There  is  no 
possibility  of  equating  land-value  with  labor-value,  nor  nat- 
ural rent  with  wages;  they  can  be  expressed  only  compara- 
tively, in  terms  of  the  life-supporting  ability  {under  like 
labor)  of  other  portions  of  land.  This  Is  why  the  net 
average  natural  rent  must  be  zero:  in  order  to  eliminate 
land  from  the  equation  of  labor-values  entirely,  leaving 
the  latter  free  for  equation  without  the  presence  of  an 
unknown  quantity.  Land-value  or  natural  rent  excludes 
all  consideration  of  artificial  improvements  upon  the  land. 


SPECIALIZATION    IN    BARTER  139 

Landlordism  is  the  legal,  Idle  ownership  or  control  of 
land,  with  the  enjoyment  of  its  commercial  rent.  It  is  one 
form  of  Capitalism. 

Commercial  Rent  is  the  excess  over  natural  rent  of  the 
current  payments  exacted  from  Labor  by  Landlordism  for 
the  use  of  the  land.  It  is  a  tax  imposed  upon  exchange 
between  those  using  the  land  in  one  form  of  production 
and  those  prosecuting  production  in  other  forms  or  locali- 
ties.    In  this  it  is  one  form  of  Barter. 

The  term  rent  is  often  used,  in  actual  life,  to  include 
payments  made  for  the  use  of  buildings  or  land-improve- 
ments; but  these  latter  are  not  true  rent  at  all,  but  are 
interest  paid  upon  Capitalism. 

Capital  is  the  material  product  of  labor  which  is  uti- 
lized by  labor  in  the  further  production  of  value. 

Depreciation  is  the  natural  and  inevitable  loss  in  value 
of  capital  with  time  and  use.  It  must  be  made  good  by 
Labor  using  capital  before  exchange  with  other  lines 
of  production  can  be  effected. 

Capitalism  is  the  legal,  idle  ownership  of  capital,  with 
the  enjoyment  of  its  artificial  net  income:  Interest.  It  is 
almost  one  with  Landlordism.  In  fact,  the  word  capital- 
ism will  usually  be  used,  hereafter,  to  include  both  ideas.* 

Interest  is  the  surplus  over  depreciation  collected  by 
the  idle  Capitalist  for  the  privilege  of  use  of  his  capital 
in  production  by  Labor.  It  is  a  tax  upon  Exchange 
between  the  value  thus  produced  and  other  forms  of  value. 
In  this  it  is  one  form  of  Barter. 

4  Capital  and  capitalism  must  never  be  confused.  Capital  is  a  material 
thing,  a  tool,  and  can  originate  only  in  productive  labor.  Capitalism  is 
an  institution,  a  legal  artifice,  and  originates,  in  the  great  majority  of 
cases,  solely  in   barter. 


I40  THE    COST    OF    COMPETITION 

The  Two  Economic  Divisions  of  Society 

From  these  items  thus  defined,  with  the  others  given  in 
previous  chapters,  may  be  built  up  the  complete  anatomy 
of  the  modern  economic  organism.  It  appears  in  a  dual, 
Janus-faced  form,  as  displayed  on  pages  142  and  143, 
each  aspect  arrayed  under  its  characteristic  cognomen; 
viz. :    Production  and  economic  Dissipation,  respectively. 

Economic  Dissipation.  These  two  terms.  Produc- 
tion and  Dissipation,  are  strongly  contrasted  in  their  eco- 
nomic significance.  The  first  of  these  terms  we  are  now  in 
a  position  to  well  understand.  It  was  defined  on  page  28, 
and  the  discussion  since  then  of  the  phenomena  of  special- 
ization and  coordination  must  have  given  it  a  clear  light. 
The  significance  of  the  second  of  these  terms  is  only  now 
about  to  be  brought  out.  It  will  first  receive  preliminary 
definition  as  covering  all  economic  activity  not  productive 
of  value.  Its  complete  definition,  even  in  outline,  can  be 
had  only  from  the  two  following  full-page  tabulations  of 
the  characteristics  of  production  and  dissipation  respec- 
tively. Its  full  comprehension  can  be  had  only  after  the 
most  exhaustive  discussion  and  deliberate  reflection. 
This  one  volume  alone,  while  devoted  especially  to  this 
task,  is  altogether  incommensurate  with  its  size,  its  intri- 
cacy or  its  importance. 

In  the  following  exhibit  there  is  only  one  item  which 
calls  for  immediate  discussion.  This  is  the  statement  that 
Production  consists  solely  of  the  overcoming  of  material 
or  brute  obstacles,  while  at  the  same  time  superintendence 
is  included  in  Production.  Many  a  man  who  has  engaged 
more  or  less  in  superintendence  will  say  that  it  consists 
largely  in  overcoming  human  obstacles. 


SPECIALIZATION    IN    BARTER  141 

The  case  well  illustrates  just  the  main  point  which  is 
sought  to  be  brought  out,  in  one  of  its  more  obscure  occur- 
rences. The  superintendence  of  to-day  combines  two  dis- 
tinct duties : 

( 1 )  The  organization  and  education  of  labor  of  an 
inferior  degree  of  intelligence  into  the  maximum  possible 
efficiency; 

(2)  The  exhortation  or  compulsion  of  labor  which  has 
already  contracted  to  perform  certain  duties  at  an  agreed 
price  to  fulfillment  or  over-fulfillment  of  its  agreement. 

The  first  is  purely  productive  effort.  It  naturally 
should,  and  it  usually  does,  meet  with  the  heartiest 
cooperation  on  the  part  of  subordinate  labor;  the  under- 
standing of  the  laborer  may  sometimes  be  small,  but  the 
spirit  is  willing.  Whenever  this  is  not  so  it  is  because  of 
the  constant  presence  of  (2)  and  its  association,  in  the 
mind  of  the  laborer,  with  the  superintendent's  every  efort. 

The  second  is  purely  barter  in  character.  The  work 
was  agreed  upon  at  a  fixed  price  per  day.  In  reaching 
that  agreement  the  laborer  is  at  all  times  conscious  of  the 
fact  that  the  wage  is  lov/  because  its  every  diminution  goes 
into  his  employer's  pocket;  what  he  doesn't  get  as  wages 
the  employer  gets  in  the  form  of  profit.  He  accepts 
because  he  can  get  no  better.  He  knows,  too,  that  the 
less  which  he  does  per  day  for  a  given  wage,  all  of 
his  class  uniting  in  the  same  policy,  the  greater  will  be  the 
wage  per  day.  (For  the  proof  of  this  statement  see  pages 
155  to  192.)  All  of  these  ideas  unite  to  form  in  labor's 
mind  a  most  natural  antagonism  to  the  desires  of  any 
agent  of  its  employer's  interests;  which,  for  this  portion 
of  his  time  and  effort,  the  superintendent  is.  The  laborer's 
will  therefore  assumes  an  attitude  of  resistance.  He 
embodies  psychologically  for  the  first  time  (and  therefore 
gets  the  blame  for)  what  the  wage-system  has  embodied 


142  THE   COST   OF    COMPETITION 

DIVISION  I 
PRODUCTION 

The  CREATION  of  VALUE: 

By  the  TRANSFORMATION  and  Transportation 


Of  Raw  Material,  viz.: 
With  the  use  of  Capital,  viz. 

In  the  hands  of  Labor,  viz.: 


In  Specialization  and  Co-oper- 
ation : 


Through  the   medium  of 

From   the    Natural    Sources 
of  Value,  viz.:  • 


Stock  and 

Incidental  Current  Supplies; 

Improvements  on  Land,  Buildings, 
and  all  Tools,  including  both 
Hand-tools  and  Machinery ; 

Productive    Labor    proper,    unskilled 

and  skilled. 
Labor    devoted    to    balancing   Depre- 
ciation, and 
Superintendence,    including 

Organization    and    Direction, 
Design,  and 
Invention ; 

Among  a  host  of  Trades,  Arts  and 
Professions    (excluding    only    Civil 

Law)  ; 

Exchange ; 

The  Field,  the  Forest, 
The  Mine  and  the  Sea; 


To  its  Natural  Destination,  viz. :    The    ULTIMATE    CONSUMER. 
It  consists  solely  of  the  overcoming  of 

Natural,  Material,  Inanimate  or  Brute  Obstacles. 
It  brings  to  each  Worker,  in  so  far  as  it  is  uninterfered  with. 

What  He  Produces, 

except   as  he   may  choose   to   divide   with   the   Incapables:  The   Sick,   the 
Maimed,  the   Insane,  the   Orphans,   the   Criminals,   etc. 
It  is  devoted  solely  to 

The   SUPPORT  of  HUMAN   LIFE   and   GROWTH, 
and  is  the  sole  means  to  that  end  in  the  possession  of  Society. 


SPECIALIZATION    IN    BARTER  143 

DIVISION  II 
DISSIPATION 

The  CONTROL  of  VALUATION: 

By  Barter  or  Competition  over  the 
Price  or  Opportunity 
Of  Raw  Material; 

Of   Land,   viz.:  Geographical  Site; 

Of  the  use  of  Capital,  viz.:  Improvements    on    Land,    Buildings, 

Tools,  Machinery; 
Of  Partially  Completed  Prod- 
uct; 
Of    Labor    exerted    productively 
with   and   upon   the   foregoing; 
and 
Of  The  Final  Product;  The    Value    uhimately    reaching    the 

World  of  Consumers,  for  the  Sup- 
port of  Human  Life  and  Growth; 
By  Taxing  Exchange  between  any  two  of  these  six  foregoing  items, 
With  the  aid  of  Landlordism:  The  legal,  idle  Oivnership  of  Land; 
With  the  aid  of  Capitalism:  The  legal,  idle  Onvnership  of  Capital; 
With  the  aid  of  Barter  pure  and  simple,  viz.:  The  active  diversion 
of    Market-Prices,    whether    of    Commodities    or    of    Labor,    away 
from  the  Natural  Price; 
In    Civil    Controversy:     Between  a  Host  of  rival  Dealers,  Salesmen, 
Agents,  Corporations,  Trusts,  Syndicates,  Promoters,  etc.,  and   their 
Assistants:  the  Civil  Laivyers, 
It  consists  solely  of  the  overcoming  of 

The  Resistance  of  the  Human  Will  and  Intellect, 
By  means  of  Skillful  Persuasion, 
Of  Misguidance  by  Half-truths, 
Of  Downright  Deceit, 

Of  the  Exploitation  of  Discomfort  and  Duress,  Pride  and  Fear, 
Of  the  Active   Creation  of  a  Deforming  Pressure  against  True   and 
Normal  Life. 
It  is  devoted  solely  to  the  transfer  to  each  Devotee  of  a  portion  of  the 

VALUE  which  someone   ELSE   has  PRODUCED. 
It  concerns  solely  the 

Distribution  Among  Individuals, 
and  not  the 

Creation 

of  Value.     It  does  absolutely  nothing  for 

THE  SUPPORT  of  HUMAN  LIFE  and  GROWTH. 


144  THE    COST    OF    COMPETITION 

causatively  as  a  fundamental  Institution  In  our  static  law, 
viz. :  antagonism  of  interests  as  the  sole  guide  in  the  dis- 
tribution of  wealth.  This  resistance  constitutes  Labor's 
chief  method  of  barter,  whether  displayed  at  the  moment 
or  deliberately  systematized  In  organized  effort,  in  strike 
or  boycott.  In  this  sense  the  laborer  as  well  as  the  super- 
intendent spends  a  portion  of  his  time  In  barter;  but  it  is  a 
very  small  portion  of  the  whole  for  the  former.^ 

Economic  Production  and  Economic  Dissipation. 

In  the  light  of  the  above  exhibit  it  Is  proper  to  repeat 
our  definitions  of  Emulation  and  Competition  In  final 
official  and  expanded  form  and  to  show  their  Identity, 
as  psychological  impulses,  with  the  two  broad  divisions  of 
economic  activity  Into  which  we  have  just  seen  the  Indus- 
trial and  commercial  world  to  be  divided,  into  Production 
and  Dissipation,  respectively.  At  the  same  time  the 
demarcation  between  the  two  divisions  in  the  familiar 
affairs  of  everyday  life  may  be  made  more  plain. 

Emulation  Is  the  rivalrous  spirit  finding  expression  in 
Increased  Activity  of  Production  of  Value. 

Competition  is  the  rivalrous  spirit,  and  also  the  resultant 
act,  when  finding  expression  in  increased  Intensity 
(but  not  necessarily  activity)  of  Barter  over  Valuation. 
It  Is  antagonism  in  the  determination  of  market-prices. 
It  Includes  all  activity  expended  In  Influencing  the  direc- 
tion of  demand  (ordinarily  called  "finding  a  market") 
so  that  purchasing-power  vv'hich  might  be  expended  upon 
a  competitor's  goods,  or  upon  some  entirely  different  com- 
modity, is  diverted  into  one's  own  direction.  It  includes 
all  rigidity  of  purpose,  when  evinced  In  the  Idle  ownership 
of  land  or  capital,  aimed  toward  the  restriction  of  the 
use  of  these  necessary  adjuncts  to  the  production  of  value 

C  For  a  continuation  of  this  topic  see  pages  244  and  504. 


SPECIALIZATION    IN    BARTER  145 

by  labor  and  to  labor's  exchange  with  the  consumer,  to 
the  end  that  both  laborer  and  consumer  will  be  ready  to 
pay  a  greater  tax  for  the  privilege  of  their  use.  It 
includes : 

( 1 )  All  commercial  negotiation  f 

(2)  All  but  a  mere  tithe  of  all  advertising;'^ 

(3)  All  commercial  traveling,  solicitation  and  com- 
mission-agency, and  all  commercial  correspondence  carried 
on  with  the  same  in  view; 

(4)  The  activities  of  all  combinations  of  individuals 
looking  to  the  wielding  of  greater  power  against  their 
economic  adversaries,  such  as  corporations,  consolidations, 
trusts,  pools,  and  lock-outs;  all  labor-unions,  strikes  and 
boycotts ; 

(5)  All  employment  or  sale  of  labor,  in  the  sense  of 
the  negotiation  of  an  agreement  preliminary  to  going  to 
work,  or  of  the  reopening  of  that  contract  at  any  future 
time ; 

(6)  The  promotion  and  financing  of  all  commercial 
enterprises,  old  or  new,  except  pure  invention,  and  hence 
nearly  all  banking,  all  brokerage,  and  all  insurance,  mort- 
gage and  pawn-shop  loans; 

(7)  All    stock-manipulation,     trading     or     gambling, 

6  A  great  deal  of  such  negotiation,  especially  in  retail  trade,  involves 
the  communication  of  information  concerning  quality,  etc.,  of  goods.  In 
so  far  as  the  information  thus  contributed  is  true  and  reliable,  and  is 
known  to  be  so  with  that  confidence  on  the  part  of  the  recipient  which 
alone  can  make  it  of  use  to  him,  it  is  productive  of  value  and  its  cost 
should  be  classed  with  Production.  But  it  is  plain  that  such  a  process 
is  always  preliminary  and  incidental  to  and  quite  distinct  from  true 
negotiation,  which  consists  purely  of  the  discussion  of  price. 

7  The  reader  who  is  inclined  to  question  the  validity  of  including 
advertising  as  a  non-productive  species  of  eilort  is  referred  to  a  discussion 
of  this  topic  on  pages  170-175.  The  question  naturally  arises  at  this  point 
in  the  analysis,  but  its  answer  is  preferably  deferred  until  some  further 
definitions  can  be  introduced. 


146  THE    COST    OF    COMPETITION 

whether  on  'Change  or  in  the  prosecution  of  one's  private 
business; 

(8)  All  expenses  for  corporation-law  or  commercial 
counsel,  for  lobby  or  for  "  influence  "; 

(9)  All  civil  suits  looking  toward  the  settlement  of 
disputes  as  to  valuation  or  ownership,  which  includes  all 
civil  law; 

(10)  All  multiplication  of  accounts  because  of  any  of 
the  above; 

(11)  All  cost  of  employing,  organizing  and  superin- 
tending all  assistant  labor  directed  into  the  furtherance 
of  the  above  processes. 

The  Homogeneity  of  Competitive,  Dissipative 
Effort.  The  classification  just  listed  includes  within 
each  class  industrial  activities  which  bear,  superficially,  the 
greatest  dissimilarity.  Yet  it  has  been  the  office  of  the 
preceding  pages  to  demonstrate  that  in  their  Inherent 
nature  they  are  alike.  It  will  be  the  office  of  later  pages 
to  prove  that  they  are  properly  to  be  styled  as  dissipative, 
and  that  in  their  effects  upon  the  individual  and  the  com- 
munity they  are  also  alike.  They  together  constitute  a 
single  homogeneous  Institution.  In  all  following  analysis, 
therefore,  it  will  be  taken  as  demonstrated  that  It  makes 
not  the  slighest  difference  in  the  amount  of  the  evil 
wrought,  but  merely  In  the  form  of  its  detail,  whether 
the  competition  under  discussion  makes  use  of  land-values, 
capital,  the  circulating  medium,  the  opportunity  of  daily 
labor,  a  market  for  material  commodities  or  the  most 
Impalpable  of  personal  forces  promotive  of  progress,  as 
the  basis  for  its  negotiatlve  and  dissipative  activities.  This 
position  the  sequel  will  be  found  to  uphold.  In  each  of 
these  cases  the  effect  upon  the  community  will  prove  to  be 
equally  bad.      Each   is  equally   responsible.      No  one  of 


SPECIALIZATION    IN    BARTER  147 

them  is  a  cause,  the  rest  being  effects.  All  are  parts  of 
one  whole.  The  remedy  to  be  effected  by  the  removal 
of  any  one  of  them  will  be  fractional  only,  and  propor- 
tional to  the  degree  of  its  presence.  Only  the  excision  of 
Division  II  in  its  entirety,  from  each  department  of  indus- 
try where  it  appears,  can  accomplish  aught.  Finally,  and 
most  important,  the  cure  thus  accomplished  will  not  be 
coincident  with  the  confines  of  the  excision,  thus  to  be 
identified  as  its  result,  but  will  be  almost  equally  dis- 
tributed, by  the  fluidity  of  life,  throughout  the  community , 
so  that  the  identity  of  cause  and  effect  will  be  traceable 
only  by  the  most  careful  of  analyses.  Just  as  the  debili- 
tating effect  of  cancerous  growth  in  the  human  body  is 
felt  in  all  of  its  functions,  almost  regardless  of  the  loca- 
tion of  the  cancer,  so  is  the  effect  of  this  evil  institution  of 
barter,  now  harbored  within  each  organ  of  the  body  poli- 
tic, felt  to  its  uttermost  fibre.  Just  as  the  removal  of  the 
cancer  relieves  the  patient  from  head  to  heels,  so  will  the 
excision  of  barter  from  any  one  of  our  economic  organs 
lift  the  brakes  from  trade  and  life  in  all  directions  almost 
equally. 


VIII 
DISTRIBUTION 

THE  wealth  of  material  commodities  which  sup- 
ports all  life,  growth  and  enjoyment  for  a  com- 
munity arises,  then,  from  the  efforts  of  only  one 
division  of  the  industrial  body:  the  Producers.  By  the 
processes  of  exchange,  modified  by  barter,  this  wealth  is 
divided  between,  or  "  distributed  "  to,  the  several  classes 
and  individuals  of  society  for  their  consumption  and  sup- 
port. Obviously,  all  which  the  Competitive  Division 
enjoys  is  a  portion  of  what  the  Productive  Division  pro- 
duced and  was  forced  to  share  with  them. 

It  will  soon  be  made  obvious  that  the  productive  division 
is  forced  to  place  its  entire  product  in  the  hands  of  the 
competitive  division,  to  receive  back  again  only  that 
minimum  portion  which  will  persuade  it  to  remain  active 
in  production. 

If  the  exchanges  were  carried  on  literally,  as  they  were 
imagined  to  be  in  the  elementary  illustration  of  fish  and 
hares,  the  goods  being  actually  brought  to  market  and 
visibly  exchanged  there,  this  fact  would  be  much  less 
obscure  than  it  is  at  present.  (See  page  79.)  But  the 
complexities  of  modern  industry  forbid  that  simple  and 
transparent  method.  Instead,  the  device  called  money  is 
introduced.  Each  producer  exchanges  the  product  of  his 
labor  for  money,  which,  supposedly  at  least,  undergoes  no 
depreciation  with  time  nor  loss  by  subdivision,  which  he 
can  keep  and  accumulate  or  subdivide  for  whatever  pur- 
poses in  exchange  he  may  be  inclined  to  accomplish.     In 

148 


DISTRIBUTION  149 

this  way  money  Is  a  tremendous  convenience;  so  much  so, 
in  fact,  that  its  presence  is  one  of  the  first  essentials  to 
specialization.  Yet  money  itself  does  nothing.  It  is 
merely  a  certificate  of  value  produced;  it  can  produce  no 
value. 

While  there  are  many  minor  points  connected  with  our 
present  supply  of  money  which  are  intimately  interwoven 
with  and  rely  upon  the  distinctions  which  are  emphasized 
in  this  volume,  yet  they  need  not  be  introduced  into  the 
argument.  They  stand,  in  relation  to  it,  in  the  nature  of 
incidental  results,  not  causes.  In  the  main,  money  stands 
as  stated:  as  a  mere  certificate  of  value  produced.  When- 
ever and  wherever  money  may  appear  to  be  itself  active 
in  the  extraction  of  value  from  the  producing  classes,  it 
is  as  a  mere  incidental  tool  in  the  hands  of  the  bargainers. 
It  would  be  well,  indeed,  if  the  people's  supply  of  money 
might  be  removed  from  all  influence  of  private  interests. 
Yet  if  this  were  once  done,  while  it  would  constitute  a  gain 
for  the  people,  it  would  remove  from  the  field  of  barter 
only  one  of  industry's  tools  among  ten  thousand  upon 
which  barter  is  fastened;  and  the  one,  too,  with  which  the 
barterers  themselves  least  like  to  tamper.  The  alleviation 
of  pressure  thereby  would  be  scarcely  perceptible.  This 
is  the  lesson  needful  to  be  learned  by  Mr.  Bryan  and  the 
populists. 

Value  and  Valuation.  The  primary  factor  in  the 
exchange  of  value-produced  for  its  money-equivalent  is 
the  relation  between  value  and  valuation.  Value  is 
expressible  directly  only  in  terms  of  life  itself,  or  indirectly 
in  terms  of  the  goods  which  will  support  life.  Valua- 
tion is  measured  in  money:  gold,  we  will  assume.  Gold 
is  merely  one  commodity  among  many  others,  produced 
by  labor  and  having  its  comparative  valuation  based,  ulti- 
mately,  upon   the   amount  of   exertion   required   to   pro- 


ISO  THE    COST    OF   COMPETITION 

duce  It.  Thus,  let  it  be  supposed  that  some  discovery, 
such  as  quartz-milling  or  a  new  goldfield,  should  suddenly 
halve  the  cost  (measured  in  human  exertion)  of  produc- 
ing gold.  Then  immediately  the  prices  of  all  other  com- 
modities and  of  labor  would  simultaneously  be  doubled. 
Their  mutual  comparative  valuation  (and  all  valuation  is 
comparative)  would  remain  unchanged;  that  of  gold 
would  have  fallen.  All  prices  (valuations  expressed  in 
terms  of  gold)  would  be  doubled;  but  no  life-supporting 
commodity  would  be  harder  to  procure. 

The    Conservation    of    Economic    Energy.     The 

aggregate  value  currently  produced  by  a  community  is 
equal  to  the  aggregate  valuation  currently  distributed 
throughout  its  membership.^ 

1  This  equation  cannot  be  written  mathematically,  because  we  have  no 
accepted  unit  for  the  measurement  of  life.  Population  is  at  present  our 
only  exact  measure,  and  it  omits  all  consideration  of  comparative  worth 
of  individuals.  As  to  the  basis  upon  which  this  last  should  be  estimated, 
that  belongs  to  the  department  of  ethics,  not  of  economics.  Even  there 
we  have  no  unit  of  measurement,  or  rather,  no  means  of  applying  it.  The 
unit  accepted  by  Christian  philosophy  is  the  unit  of  unselfishness:  the 
degree  to  which  a  given  life  supports  other  life,  in  quantity  and  quality. 
But  this  is  merely  measuring  life  in  terms  of  life,  as  we  do  length  in  terms 
of  length:  which  was  stated  at  the  outset  to  be  the  only  method  possible. 
Moreover,  it  is  very  difficult  to  measure  how  far  one  life  accomplishes 
the  support  of  other  life.  Some  of  the  best-intentioned  lives  not  only  fail 
to  accomplish  much  in  this  direction,  but  they  are  actually,  although  uncon- 
sciously, destructive  of  other  lives.  On  the  other  hand,  some  of  the  most 
effective  work  in  the  support  of  other  lives  is  done  by  individuals  and 
classes  which  are  not  now  recognized  as  philanthropic,  or  even  as  being 
valuable  to  the  community.  Therefore,  this  equation  between  aggregate 
Value  and   Valuation   is  best  left  just  as  it  stands:  stated   in  words  only. 

It  is  the  prime  object  of  this  part  of  the  work  to  show  how  far  our  pres- 
ent economic  system  wanders  astray  from  its  sole  reason  for  existence:  the 
support  of  human  life.  For  that  purpose  the  life  of  any  community,  as  it 
stands,  will  be  taken  as  the  basis  from  which  to  measure  departures,  with- 
out any  further  comment  upon  the  comparative  worth  of  different  sorts 
of  individual  life.  The  life  of  the  community  itself,  including  its  self- 
chosen  etliical  standards,  is  to  be  the  temporarily  unquestioned  unit  of 
measurement. 


DISTRIBUTION  151 

This  law  will  be  regarded  as  axiomatic.  Its  substan- 
tiation rests  upon  the  law  of  the  conservation  of  physical 
energy,  of  which  it  constitutes  merely  one  special 
statement. 

Although  no  statistical  proof  can  be  adduced  to  uphold 
this  law,  its  foundation  upon  the  principle  of  the  natural 
conservation  of  energy  being  much  more  firm,  yet  it  is 
often  visible  in  actual  commerce  how  rigidly  aggregate 
value  and  aggregate  valuation  (aggregate  purchasing- 
power)  are  linked  together.  Either  may  act  as  a  cause, 
the  other  being  limited  thereby.  Sometimes  limited  pur- 
chasing-power limits  actual  productivity;  sometimes 
limited  actual  productivity  limits  purchasing-power. 
The  first  is  true  in  hard  times,  when  buyers  cannot  be 
found  and  "  overproduction  "  is  rife;  the  second  is  true  in 
"  boom  "  times,  when  workers  enough  cannot  be  found 
and  business  is  hampered  by  delayed  fulfillment  of  orders. 
In  either  case  the  two  are  equal. 

Price.  The  outline  analysis  of  industrial  activities  dis- 
played on  pages  142  and  143,  including  both  Production 
on  the  one  hand  and  Competition  or  Dissipation  on  the 
other,  covers  all  of  the  different  sorts  of  effort  now  con- 
tributive  to  the  placing  in  the  Consumer's  hands  of  any 
finished  commodity  and  to  the  determination  of  the  price 
which  he  shall  pay  for  it.  Just  as  the  Producer  is  the  sole 
source  of  all  Value  created  from  the  earth,  so  is  the  Con- 
sumer its  sole  destination  for  final  absorption  and  dissipa- 
tion into  dust  again.  Therefore  is  the  Consumer  to  be 
regarded  as  the  sole  source  of  that  current  of  Money, 
useful  as  a  certificate  of  Valuation  but  otherwise  worth- 
less for  the  support  of  human  life,  which  flows  in  the 
opposite  direction,  from  Consumer  to  Producer,  to  main- 
tain a  record  of  the  life-giving  current  of  Value  flowing 
from  Producer  to  Consumer.     The  price  which  the  latter 


152  THE    COST    OF    COMPETITION 

pays  for  any  article,  then,  must  cover  every  Item  of  all 
these  many  sorts  of  effort.  He  is  the  sole  Patron  of 
Industry.  His  money  purchases  the  raw  material,  buys 
or  hires  the  machinery  with  which  to  work  it,  hires  the 
labor  to  operate  it,  employs  the  superintendent  or  employer 
to  supervise  the  labor,  and  subsidizes  the  barterer  to 
barter  over  it.  There  is  no  other  possible  source  of  Pay 
for  all  these  things  than  he. 

Therefore  let  it  ever  be  remembered,  when  the  price  of 
anything  in  the  open  market  be  referred  to,  that  it  consists 
of  ihe  summation  of  the  costs  of  all  of  the  items  tabulated 
on  pages  142  and  143  as  making  up  respectively  the  two 
Divisions  of  the  industrial  body:  Production  and  Com- 
petition, or  Production  and  Dissipation. 

The  inclusion  of  all  of  the  items  belonging  to  Division 
I  is  actively,  though  often  obscurely,  enforced  by  the 
operation  of  Natural  Law,  inflexible  to  the  human  will. 
The  inclusion  of  all  those  belonging  to  Division  II  is 
actively,  though  often  unconsciously,  enforced  by  the 
operation  of  Human  Law,  which  is  variable  at  will. 

The  Money-Scale.  The  ratio  existing  between  the 
aggregate  Value  and  the  aggregate  Valuation  in  a  given 
community  will  be  called  its  money-scale  of  valuation.  It 
is  its  valuation  of  human  life  expressed  In  money.  The 
lowest  terms  to  which  It  can  be  reduced  are  the  daily 
income  of  the  "average"  man;  but  in  this  the  word 
average  covers  such  extremes  of  difference  that  It  is 
scarcely  a  help  to  the  understanding. 

Into  this  ratio  two  factors  enter: 

(i)  The  average  productivity  of  the  individual,  taken 
for  the  entire  community.  This  factor  is  of  use  only  in 
comparing  one  community  with  another.  As  It  Is  our 
prime  purpose  to  study  only  the  internal  anatomy  of  any 
given  single  community,  in  this  case  the  American  nation, 


DISTRIBUTION  153 

this  factor  will  hereafter  be  neglected,  as  lying  in  the 
premises. 

(2)  The  amount  of  Competition  existing  within  the 
community;  that  is,  the  extent  to  which  Division  II  appears 
in  the  community's  activities.  Since  the  Value  is  produced 
only  by  the  Productive  Division,  while  the  distribution  of 
Valuation  takes  place  throughout  all  classes,  it  becomes 
immediately  evident  that 

The  aggregate  current  Valuation  distributed  in  a  com- 
munity is  to  its  aggregate  current  Value  produced,  distrib- 
uted and  consumed  {which  ratio  constitutes  its  average 
Money-scale)  as  its  total  industrial  and  commercial  efort 
(Division  I  plus  Division  II)  is  to  its  total  productive 
effort  {Division  I  alone). 

To  the  elaboration  and  better  understanding  of  this 
law  return  will  be  made  after  considering  some  further 
necessary  definitions. 


Purchasing-Power  and    Its    Social    Distribution 

The  aggregate  Value  currerttly  produced  by  a  com- 
munity for  its  support,  and  thus  made  available  for  dis- 
tribution amongst  its  several  classes  and  individuals,  is 
translated,  before  such  distribution,  into  Valuation  in 
money-form,  by  multiplication  by  the  money-scale.  It  is 
in  this  form  that  each  individual  receives  his  current 
income  of  purchasing-power.  It  is  because  of  this  fact 
that  he  commonly  looks  too  closely  at  the  total  fund  of 
money  available  in  a  community,  as  a  measure  of  its  pros- 
perity, instead  of  at  the  total  fund  of  Value  produced. 
But  it  is  ever  to  be  remembered  that  what  supports  life  is 
Value  only,  and  that  the  aggregate  current  production  of 
Money-valuation  may  be  swelled  indefinitely,  by  increas- 


154  THE    COST    OF    COMPETITION 

ing  the  money-scale  of  average  Price,  yet  will  the  com- 
munity be  not  one  whit  better  off;  indeed,  as  will  be  seen 
later,  it  will  be  worse  off. 

To  these  several  allotments  of  Valuation,  or  forms  and 
sizes  of  current  individual  income,  it  is  convenient  to 
assign  distinguishing  names.  This  distinctive  classifica- 
tion of  sorts  of  income  must  naturally  align  itself  with 
the  classifications  and  distinctions  already  listed,  of  eco- 
nomic activity  into  Production  and  Competition  and  of 
psychic  impulse  into  Emulation  and  Competition.  Upon 
the  same  basis  the  total  amount  of  Valuation  currently 
distributed  throughout  the  community  naturally  divides 
itself  into  two  strongly  contrasted  divisions,  namely 
IFages  and  Dissipation. 

Wages.  The  income  alloted  to  productive  effort, 
whether  by  class  or  by  individual,  is  to  be  called  wages. 
The  term  includes,  as  well  as  what  are  ordinarily  called 
wages,  all  salaries,  when  paid  for  pure  superintendence  or 
for  professional  work  other  than  civil  law,  such  as  in 
education,  journalism,  histrionics,  etc.,  and  all  professional 
and  artists'  fees,  again  excluding  fees  in  civil  law.  It 
excludes  what  are  ordinarily  called  wages  when  the  latter 
are  paid  for  assistance  in  any  of  the  sorts  of  effort  which 
have  been  already  defined  as  competitive. 

Dissipation.  The  income  allotted  to  the  bargaining 
division  of  society,  as  a  unit,  will  be  called  dissipation.^ 
Following  the  schedule  of  page  143,  it  is  divisible  into 
three  several  classes  or  portions,  viz. : 

( 1 )  That  won  by  the  idle  control  of  land-titles,  in  so 
far  as  they  affect  natural  site  only,  to  be  called  rent. 

(2)  That  won  by  the  idle  control  of  the  legal  titles  to 

-  The  reasons  for  the  choice  of  this  term,  and  its  further  definition,  will 
be  found  on  pages  162  and  following. 


DISTRIBUTION  155 

capital,  called  "  securities,"  to  be  called  interest.  It 
includes  all  dividends  and  the  so-called  "  rent  "  of  build- 
ings and  land-improvements  (which  is  excluded  from  the 
technical  economic  term  rent) ,  as  well  as  what  is  commonly 
called  interest. 

(3)  That  won  by  barter  pure  and  simple,  active  in 
exchange  as  contrasted  with  the  idleness  of  landlordism 
and  capitalism,  to  be  known  as  gross  profit. 

Individuals  engaged  in  active  business  and  also  having 
an  owner's  interest  in  the  property  involved  in  that  bus- 
iness derive  an  income  which  is  properly  the  sum  of  all 
three  of  these  quite  distinctive  subdivisions,  although  to 
them  it  appears  as  a  single  net  income.  A  man  so  situated 
insists  upon  receiving  a  greater  return  for  his  time  than  if 
he  made  the  same  exertion  but  owned  no  property  in  the 
business.  He  recognizes  that  he  must  be  paid,  in  addi- 
tion to  the  income  won  by  current  effort,  the  same  sums 
which  he  would  receive  were  his  land  and  his  capital  bor- 
rowed for  use  in  business  by  other  parties.  Or,  obversely, 
he  is  not  content  to  draw  from  his  land  and  capital,  while 
actively  superintending  their  use,  only  that  interest  which 
borrowers  would  pay  him  while  he  remained  idle;  he  must 
have  from  his  business,  in  addition,  the  salary  which  he 
could  earn  by  hiring  out  his  efforts  to  others. 

If,  at  the  same  time,  he  spends  a  portion  of  his  time 
and  strength  in  actually  forwarding  production,  an 
accurate  analysis  of  his  income  must  also  set  apart  one 
portion  of  it  as  pure  wages,  although  he  may  receive  his 
money  quarterly,  or  even  be  paid  no  fixed  periodic  sum 
at  all. 

This  illustration  instances  the  frequency  with  which  one 
man  may  occupy  simultaneously  three  or  four  quite  dis- 
tinct economic  classes,  his  activities  in  each  having  pos- 
sibly the  most  unlike,  or  even  quite  opposite  and  incon- 


156  THE    COST    OF    COMPETITION 

sistent,  effects  upon  the  community.  Yet  of  these  funda- 
mental distinctions  he  is  usually  quite  unconscious.  He 
may  be  accurately  likened  to  the  farmer  who  supposedly 
ran  a  dairy-farm  too  ignorantly  or  too  carelessly.  It  will 
develop,  as  the  argument  proceeds,  that  certain  of  these 
forms  of  business-income  just  listed  are,  unconsciously  to 
their  promoters,  as  baneful  to  the  community  as  are  the 
dairyman's  typhoid-germs,  and  should  equally  be  exter- 
minated by  law.  This  does  not  mean,  whether  the  individ- 
ual be  a  dirty  farmer,  a  grasping  profit-seeker  or  a  vio- 
lent trades-unionist,  that  he  himself  is  to  be  broadly  con- 
demned to  extermination.  Instead,  his  activities  are  to  be 
sharply  differentiated  in  the  public  mind,  including  his 
own,  and  the  law  and  public  opinion  are  to  be  so  changed 
as  to  discourage  the  one  and  encourage  the  other,  by  an 
elimination  of  the  institutions  which  have  brought  the  de- 
structive one  into  existence. 

Gross   Profit,  Barter-cost   and   Net    Profit.     The 

gross  profits,  whether  referred  to  the  aggregate  for  the 
community  or  to  those  won  in  any  single  business,  must  be 
further  divided  into  two  contrasted  portions,  each  of 
which  is  received  by  one  of  two  contrasted  subclasses  of 
the   general   Division   of  the   Barterers  themselves,   viz. : 

(a)  The  heads  or  directors  of  the  competitive  organ- 
ization, who  either  alone  actually  do  the  negotiating  or 
at  least  monopolize  the  control  and  direction  of  it;  and 

(b)  A  host  of  assistants  who  would  otherwise  belong 
to  the  productive  class,  earning  wages,  but  who,  because 
their  efforts  are  absorbed  by  barter,  must  become  classed 
as  bargainers.  Thus,  to  illustrate,  a  printing-shop  is 
ordinarily  a  productive  establishment.  But  If  we  imagine 
Its  entire  output  to  be  absorbed,  in  the  form  of  advertis- 
ing-matter, by  a  captain  of  barter,  the  entire  printing- 
organization,  foreman  and  journeymen  Included,  becomes 


DISTRIBUTION  157 

enlisted  under  his  banner,  aiding  him  to  fight  his  battles 
with  his  competitors,  and  is  therefore  to  be  classed  with 
the  bargainers,  although  personally  these  men  are  entirely 
unconscious  of  conducting  any  negotiation.  The  same  is 
true  of  nearly  all  stenographers,  of  the  majority  of  book- 
keepers (those  not  engaged  in  shop-accountance  of  work 
actually  done)  and  of  all  civil  lawyers.  Store-clerks  and 
salesmen  spend  a  large  part  of  their  time  and  effort  in  this 
class,  by  personally  conducting  negotiation  upon  a  small 
scale  or  by  having  their  time  occupied  by  the  efforts  of 
purchasers  to  buy  cheaply.  Although  they  also  perform 
the  necessary  and  productive  task  of  parceling  out  retail 
goods,  yet  a  greater  portion  of  such  purchasers  are  acces- 
sory to  negotiative  effort  than  is  at  first  apparent.  The 
purchases  are  made  in  smaller  quantity  at  a  time  and  at  a 
greater  number  of  localities  than  would  be  the  case  were 
all  goods  known  to  be  labeled  with  their  true  quality  and 
at  actual  cost  by  an  agent  employed  by  all  of  the  factories 
at  once  to  represent  them  Impartially  to  the  buyer.  Wit- 
ness the  dry-goods  bargain-counter:  three-quarters  of  the 
effort  outside  the  counter,  and  Its  counterpart  within,  Is 
wasted  over  the  uncertainty  as  to  just  where  may  be  had 
the  most  value  for  a  given  price. 

The  income  of  these  assistants  in  barter  Is  ordinarily 
known  as  a  wage  or  a  salary  or  a  fee;  yet  In  reality  It  Is  a 
share  of  the  gross  profits,  and  must  be  named  as  such. 
Therefore  the  gross  profits  are  divisible  into  two  portions, 
viz. : 

{a)  The  Income  allotted  to  assistants  at  barter,  to  be 
known  collectively  as  barter-cost  and  Individually  as  bar- 
ter-wages; and 

(b)  The  remainder  of  the  gross  profits  after  the  deduc- 
tion of  barter-cost,  to  be  known  as  the  net-profits,  which 
are  enjoyed  by  the  true  bargainer. 


158  THE    COST    OF   COMPETITION 

It  will  be  noted  that  the  terms  "  gross  profits  "  and  "  net 
profits  "  possess  in  economic  study  a  somewhat  different, 
although  parallel,  significance  from  that  given  them  in 
commercial  life. 

Income  and  Purchasing  Power.  Viewing  the  com- 
munity as  a  unit,  the  distribution  of  wealth  takes  place 
under  the  following  names,  viz. : 

(i)    IF  ages,  going  to  the  active  Producers  of  Value; 

(2)  Rent,  going  to  the  idle  Owners  of  Sites; 

(3)  Interest,  going  to  the  idle  Owners  of  Capital; 

(4)  Barter-cost,  going  to  the  active  Assistants  of  the 
actual  barterers;  and 

(5)  Net  Profits,  going  to  the  active  Barterers 
themselves. 

The  last  four  of  these  sections  combine  to  expand  or 
inflate  the  aggregate  Value  which  is  created  for  the  com- 
munity by  the  Producers  (or  Section  i)  alone,  and  which 
should  naturally  be  exclusively  their  property,  receivable 
as  wages,  into  the  aggregate  Valuation  which  is  distributed 
to  the  several  classes  and  millions  of  individuals  compris- 
ing all  five  Sections,  or  the  entire  community-income. 
The  share  of  Valuation  reaching  each  class  or  individual 
constitutes  its  Income. 

The  share  of  the  aggregate  Value  available  in  the  com- 
munity for  the  support  of  life  which  this  share  of  the 
aggregate  Valuation,  or  income,  will  purchase  constitutes 
the  purchasing-power  of  the  class  or  individual  in  ques- 
tion. That  is  to  say,  the  aggregate  Valuation  of  the  com- 
munity currently  distributed  in  the  form  of  wages,  rent, 
interest,  barter-cost  and  net  profits  brings  about  an  exactly 
parallel  and  proportionate  distribution  of  the  aggregate 
Value  or  Life-support  currently  available;  but  in  each 
case  the  latter  is  less  than  the  former  by  the  ratio  existing 
between   wages-plus-rent-plus-interest-plus-barter-cost-plus- 


DISTRIBUTION  159 

net-profits,  on  the  one  hand,  and  wages  alone  on  the  other. 
The  Producers  receive  less  than  what  they  produced  by 
this  ratio,  and  the  bargainers  receive  the  remainder 
although  having  produced  nothing  at  all. 

The  Economic-Biological  Cycle.''  It  is  the  office 
of  the  human  body  to  absorb  material  and  spiritual 
energy  in  the  form  of  food,  warmth,  education,  inspira- 
tion, etc.,  and  to  develop  therefrom,  by  transformation 
and  distribution  to  the  various  organic  centers,  organic 
activity;  and  it  is  the  office  of  this  activity,  under  its  own 
automatic  mental  and  moral  guidance,  to  develop  from  its 
natural  environment  a  fresh  supply  of  food,  warmth, 
education,  inspiration,  etc.,  to  take  the  place  of  that 
just  consumed.  Such  a  series  of  processes  constitutes 
what  is  known,  in  scientific  terminology,  as  an  energetic 
cycle. 

Since  national  life  has  now  developed  to  a  point  where 
it  is  as  impossible  as  it  is  undesirable  for  each  individual 
organism  to  create  literally  what  it  consumes,  thus  com- 
pleting the  cycle  within  itself  upon  a  necessarily  minute 
and  elementary  scale,  it  has  become  the  natural  office  of 
human  society,  of  the  body  economic  and  politic,  to  dis- 
tribute to  the  individuals  needing  it  for  reabsorption  the 
aggregate  supply  of  life-support  currently  created  by  the 
aggregate  community  of  interactive  individuals.  To  this 
task,  indeed,  is  now  devoted  the  major  portion  of  the 
intellectual  and  nervous  strength  of  the  community.  But 
the  energetic  cycle  has  thereby  now  become  duplex.  Upon 
the  one  side,  the  biologic  is  a  most  intricate  series  of 
organic  processes  whereby  material  energy  is  absorbed,, 
transformed,  distributed  and  rejected  in  the  several  forms 
of  bodily  energy:  muscular,  mental  and  nervous.     This 

3  The  matter  under  this  heading  will  be  of  little  interest  to  those  who 
have  made  no  study  of  the  general  science  of  energetics. 


i6o  THE    COST    OF    COMPETITION 

side  of  the  cycle  is  of  interest  to  the  biologist  and  the  psy- 
chologist, but  not  to  us.  On  the  other  side,  the  economic, 
counterbalancing  that  just  described,  is  an  almost  equally 
intricate  series  of  economic  processes  whereby  muscular, 
mental  and  nervous  energy  is  absorbed,  transformed  into 
Value,  distributed  and  rejected  to  the  various  individuals 
as  material  for  the  next  cycle.  It  is  this  side  of  the  cycle 
which  constitutes  our  proper  topic. 

The  Efficiency  of  the  Economic  Cycle.  Under 
the  law  of  the  conservation  of  energy  these  two  series 
must  ever  be  currently  equal  to  each  other,  except  for  any 
dissipation  of  energy  into  heat  which  may  occur  inciden- 
tally to  the  conduct  of  either.  When  such  dissipation  is 
absent  the  efficiency  of  the  cycle  will  be  unity.  Otherwise 
it  will  be  less.     It  can  never  be  greater. 

The  form  of  energy  which  is  absorbable  by  the  human 
organism  to  the  furtherance  of  life  is  Value.  The  poten- 
tial energy  absorbed  in  this  form  may  or  may  not  reappear 
as  vital  energy.  If  it  all  does  so,  the  biological  efficiency 
of  the  individual  is  perfect;  if  not,  biological  dissipation  is 
present,  either  bodily,  mental  or  moral.  Such  biological 
dissipation  is  solely  an  individual  phenomenon.  It  can  be 
remedied  solely  by  forces  acting  through  the  individual, 
although  they  may  originate  and  terminate  anywhere. 

The  form  of  economic  energy  which  this  resultant 
biologic  energy  again  throws  back  into  the  economic  field 
may  or  may  not  be  Value.  If  it  is,  the  life-effort  is  Pro- 
ductive. If  it  is  not,  the  life-effort  is  Competitive,  or 
economically  Dissipative.  Economic  dissipation  is  then 
present.  Such  dissipation  is  solely  a  social,  and  not  an 
individual,  phenomenon.  It  can  be  remedied  only  by 
forces  acting  upon  the  institutional  relations  between  man 
and  man.  It  is  immune  against  all  efforts  directed  through 
the  individual  alone. 


DISTRIBUTION  i6i 

When  neither  form  of  dissipation  is  present  the  four 
forms  of  energy,  viz.  : 

( 1 )  The  Economic  Value,  potential  for  life,  which  is 
absorbed, 

(2)  The  resultant  Life, 

(3)  The  Economic  Value  produced  by  that  life, 
and 

(4)  The  Valuation  into  which  3  is  converted  for  dis- 
tribution, as  a  prerequisite  to  its  absorption  again — must, 
under  the  law  of  the  conservation  of  energy,  all  be  equal. 
The  efficiency  of  the  cycle  would  then  be  perfect.  The 
goods  purchased  with  the  aggregate  or  average  income  of 
valuation  will  support  an  amount  of  life  equal  to  that  con- 
sumed in  their  original  production.  Indeed,  in  all  com- 
munities not  stationary  or  in  decadence  they  will  support 
more.  Biologic  growth,  entering  between  i  and  2,  brings 
in  a  coefficient  much  greater  than  unity.  Men,  as  maple- 
trees,  multiply  and  develop  if  properly  fed.  This  is  the 
root  of  all  social  health  and  community-growth. 

Biological  and  Economic  Dissipation.  The  pro- 
cesses which  interfere  with  this  perfection  of  efficiency  of 
the  cycle  are  these,  viz. : 

( 1 )  Biological  dissipation,  occurring  between  Forms 
I  and  3,  through  2,  of  the  above  paragraph;  and 

(2)  Economic  dissipation,  occurring  between  Forms  3 
and  I,  through  4. 

Biological  dissipation  consists  in  the  expenditure  of  pur- 
chasing-power for,  and  the  consumption  of,  goods  which 
do  not  develop  a  commensurate  amount  of  life-activity, 
which  may  be  available  for  the  further  equivalent  produc- 
tion of  value.  Such  is  the  case  of  the  sick  man  who  can- 
not assimilate  his  food,  of  the  well  man  who  buys  whisky 
when  he  needs  bread  or  who  commissions  a  steam-yacht 


i62  THE    COST   OF   COMPETITION 

for  his  health  when  what  he  needs  Is  active  outdoor  exer- 
cise, such  as  ditching/ 

Economic  dissipation  consists  in  the  consumption  of  life 
in  an  activity  which  is  not  directed  toward  the  creation  of 
Value,  but  which  is  directed  toward  the  annulment  of 
other  men's  efforts.  It  consists  in  a  transformation  of  a 
portion  of  the  Value  of  Number  3  (page  161)  into  heat, 
by  friction  and  impact,  before  it  can  reappear  as  the  Value 
of  Number  i.  Such  is  the  case  with  him  who  receives 
money  for  other  effort  in  the  economic  field  than  produc- 
tive effort,  or  for  none  at  all.  Such  is  the  case  with  the 
capitalist  class  and  with  all  bargainers  and  their  assistants; 
for  such  is  the  nature  of  all  of  the  activities  classified  under 
Division  II  in  the  exhibit  of  page  143. 

In  this  case  the  dissipation  of  life  is  not  so  obvious  as  it 
is  in  the  case  of  biological  dissipation,  though  none  the  less 
true.  It  becomes  distinct  upon  sufficient  analysis.  In  this 
case,  the  one  who  produces  nothing  but  the  annulment  of 
some  other  man's  equal  efforts  in  the  opposite  direction 
secures,     by     barter,     some     of     the     purchasing-power 

4  Herein  is  excellent  illustration  of  the  difference  between  Value  and 
Valuation.  Because  of  the  life  which  went  into  the  making  of  the  whisky, 
which  might  otherwise  have  gone  into  the  production  of  really  useful 
commodities,  it  possesses  a  valuation  equal  to  those  commodities.  But 
while  their  value,  as  life-supporters,  might  be  considerable,  the  value  of 
the  whisky  is  almost  zero.  The  same  is  true  of  the  steam-yacht.  Used 
properly,  to  serve  the  recreation  of  men  and  women  truly  in  need  of 
outdoor  idleness,  because  wearied  in  the  work  of  serving  the  world,  it  is  a 
matter  of  value.  Used  as  a  means  of  distraction  to  a  man  overburdened 
with  effort  at  amassing  unenjoyable  quantities  of  wealth  and  wearied 
with  all  the  other  distractions  which  money  can  buy,  or  as  a  means  of 
display  of  wealth  and  power  over  other  men,  it  is  barren  of  life-promoting 
Value.  But  in  either  case  it  embodies  Valuation,  because  it  requires  valu- 
able effort  to  create  and  maintain  it.  The  same  is  true  of  gold.  It  serves 
a  real  need  of  human  existence,  for  the  filling  of  teeth,  etc.,  to  just  about 
the  same  proportion  of  its  total  production  as  does  whisky  as  a  medicine 
or  the  steam-yachts  as  health-givers;  that  is  to  say,  to  an  insignificant 
degree.  Yet  it  possesses  a  very  high  and  stable  valuation  because  of  the 
very  stable  proportion  of  effort  required  to  produce  it. 


DISTRIBUTION  163 

developed  by  the  effort  of  the  producer.  Therefore,  that 
value  properly  belonging  to  one  individual,  and  commen- 
surate, according  to  biological  equilibrium,  with  his 
natural  individual  productive  and  consumptive  power,  is 
now  divided  between  two  or  three  individuals.  Ergo, 
neither  portion  can  be  commensurate  with  the  life  which 
commands  it. 

If,  as  is  the  case  in  actual  life,  one  individual  enabled 
by  barter  to  exist  without  productive  effort  draws  upon 
some  nine  others, — producers, — for  contributions  to  his 
income,  the  former's  purchasing-power  may  considerably 
exceed  theirs  in  amount.  For  example,  following  figures 
as  nearly  representative  of  current  fact  as  present  knowl- 
edge enables,  let  it  be  supposed  that  the  aggregate  pro- 
ductive power  of  the  nine  producers  be,  say,  900,  or  an 
average  of  100  apiece,  their  individual  productivities 
ranging  anywhere  from  50  to  500  apiece.  Suppose  that 
the  tenth  man,  by  barter,  secures  from  each  of  them  two- 
thirds  of  this,  or  an  aggregate  of  600.  Then  would  their 
purchasing-power  be  one-third  of  their  productive  power, 
or  an  average  of  33  (ranging  from  17  to  167)  apiece; 
while  his,  at  600,  is  eighteen  times  as  great. 

It  is  because  this  obscure  economic  dissipation  Is  an 
instance  of  the  dissipation  of  life  into  nothingness,  quite 
as  much  as  is  the  more  familiar  and  obvious  biological  dis- 
sipation, that  all  of  the  activity  expended  or  latent  in  com- 
petition has  been  styled  Dissipation.  In  both  cases  life, 
time  and  effort  are  expended  in  a  direction  thought  to  be 
productive  of  value,  but  which  is  not.  In  the  first  case  it 
was  in  the  manufacture  of  whisky,  which  men  think  they 
need  when  they  do  not;  in  the  second  case  it  was  in  the 
promotion  of  sales  or  prices,  in  the  collection  of  rent  or 
interest, — in  short,  in  barter, — which  men  think  is  a  neces- 
sary part  of  the  conduct  of  economic  life,  when  it  is  not. 


i64  THE    COST    OF    COMPETITION 

In  their  economic  aspects  the  two  sorts  of  dissipation 
are  exactly  alike:  each  directly  wastes  life  by  expending  it 
in  useless  effort;  each  indirectly  leads  to  a  much  greater 
ethical  loss  as  a  sequel.  But  because  the  first  sort  of  dis- 
sipation is  already  well  covered  with  a  full  literature  of 
analysis  and  statistics,  attention  will  here  be  reserved,  in 
our  use  of  the  word,  to  economic  dissipation  only. 

It  is  important  to  note  that  in  the  case  of  economic  dis- 
sipation, whether  through  the  medium  of  barter  or  of  the 
idle  extraction  of  interest  or  rent,  the  dissipation  occurs 
when  the  time  and  effort  are  expended  in  the  bargaining 
(when  the  latter  is  active),  or  when  it  is  expended  in  the 
making  of  the  goods  purchasable  by  the  interest-money 
when  the  barter  is  of  the  idle  form. 

No  later  act  can  ever  recall  that  waste.  The  money 
won  by  the  barter  may  be  spent  in  further  moral  dissipa- 
tion, in  riotous  living,  demoralizing  to  the  community  by 
its  example;  or  it  may  be  spent  in  leading  an  exemplary 
commercial  life,  elevating  to  the  community  by  its  exam- 
ple. Yet  to  the  economics  of  the  community  there  is 
no  difference  between  the  two;  in  each  case  productive 
effort  is  expended  without  returning  to  its  originator  the 
value  of  his  production. 

Again,  the  money  won  by  the  barter  may  be  hoarded 
into  colossal  fortunes,  involving  further  dissipation  of 
life  in  the  squeezing  of  interest-payments  out  of  the  pro- 
ducers, or  it  may  be  spent  for  steam-yachts  or  libraries. 
Here  there  is  a  difference,  between  whether  the  second, 
later  phenomenon  of  dissipation  shall  occur  or  not;  but  it 
is  not  one  which  can  ever  hope  to  cancel  the  dissipation 
involved  in  the  original  barter. 

The  popular  fallacy  that  it  makes  no  difference  to  the 
material  welfare  of  the  community  how  a  man  gets  his 
money  so  long  as  he  spends  it  again,  "  keeping  it  in  circula- 


DISTRIBUTION  165 

tion,"  cannot  be  too  deeply  condemned.  Futile  activity 
does  no  one  any  good.  The  money  he  returns  to  the  com- 
munity will  not  support  it.  It  is  what  it  will  buy.  And 
his  activity  In  securing  this  money,  to  be  poured  through 
his  hands  without  feeding  him  into  productive  activity,  has 
not  increased  by  one  atom  the  supply  of  purchasable 
goods.  It  has  increased,  on  the  other  hand,  the  money- 
scale,  the  inflation  of  the  average  price  of  a  given  amount 
of  life-supporting  Value,  and  has  decreased  the  purchas- 
ing-power of  every  dollar  throughout  the  land.  The  men 
whom  he  hires  to  build  him  his  steam-yachts  and  palatial 
"  cottages  "  are  apparently  better  off  in  having  employ- 
ment when  otherwise  they  might  be  idle ;  but  their  fellows 
all  over  the  land  are  losing  every  dollar  that  they  gain, 
and  more,  by  the  method  of  their  employment.  It  will 
become  plain,  indeed,  that  the  only  reason  why  any  man 
has  grounds  for  being  grateful  for  the  privilege  of  employ- 
ment is  that  barter  takes  place  in  the  land  and  robs  his 
neighbor  of  that  privilege. 

The  Efficiency  of  the  Industrial  Body.  From 
these  considerations,  that  Division  i  of  the  Industrial 
Body  alone  operates  to  its  support  while  Division  2  joins 
with  Division  i  in  consuming  what  the  latter  produces, 
the  accurate  statement  of  the  efficiency  of  the  Body,  as  a 
unit  and  as  a  method  of  organization, — with  no  reference 
whatever  to  the  intellectual,  moral  or  muscular  efficiency 
of  its  individual  members,  but  taking  these  as  the  starting- 
point  and  considering  the  Industrial  Body  as  a  machine  in 
which  these  individuals  are  either  properly  or  improperly 
related  to  each  other, — is  obvious. 

The  efficiency  of  the  industrial  organization  of  a  com- 
munity is  the  total  activity  effective  in  Production  of  Value 
divided  by  the  total  activity  of  the  entire  industrial  organi- 
zation visible  in  Income  of  Valuation. 


i66  THE    COST    OF    COMPETITION 

The  efficiency  of  organization  of  an  industrial  body  may 
be  further  defined  as  the  proportion  between  the  Value 
actually  produced  and  that  which  would  be  produced  were 
all  prices  settled  by  rational,  central-office  methods  instead 
of  by  barter.  These  two  definitions  will  be  found  to  be 
synonymous  with  each  other  and  with  the  ratio  of  Wages- 
divided-by-Total-Valuation  mentioned  on  page   153. 

The  Dissipative  Activity  Greater  than  the  Dis- 
sipative  Population.  It  has  been  pointed  out  that  the 
rewards  won  by  barter,  per  unit  of  time  or  exertion,  are 
far  superior  to  those  remaining  to  production,  and  that 
in  natural  equilibrium  they  must  remain  so;  in  fact,  that 
the  lion's  share  goes  to  the  barterer,  the  producer  getting 
only  enough  to  persuade  him  to  continue  production. 
Therefore  the  individuals  who  are  attracted  from  the  field 
of  production  into  that  of  barter  include  some  of  the  ablest 
in  the  land.  The  ability  which  they  possess  is  always  of  a 
combative,  coercive  sort,  whereas  the  more  purely  creative 
ability  seeks  the  arts  and  professions;  but  it  is  nevertheless 
ability.  This  fact  is  to  be  remembered  in  connection  with 
the  illustration  given  on  page  163.  It  is  altogether  prob- 
able that  the  purchasing-power  which  the  barterer  is  there 
supposed  to  accumulate  is  considerably  below  his  natural 
productive  power,  which  last  can  be  brought  out  only  when 
he  alters  from  his  antagonism  to  the  nine,  in  barter,  to  co- 
operation with  them  in  production.  Whereas  he  wins  600 
by  barter  he  could  probably  produce  900  if  there  were 
no  barter.  But  in  any  event  it  is  fair  to  assume  that  his 
latent  productivity  is  at  least  equal  to  600.  Had  it  been 
developed  by  conserved  freedom  of  exchange  the  aggre- 
gate for  the  ten  of  them  would  have  been  900  plus  600,  or 
1500,  an  average  of  150  apiece — as  contrasted  with  an 
average  of  90  apiece  for  the  entire  community,  or  33 
apiece  for  the  producers,  under  barter.     Had  the  purchas- 


DISTRIBUTION  167 

Ing-power  been  allotted  to  each  in  equality  with  his  produc- 
tion, as  is  only  just,  the  nine  would  have  averaged  100 
apiece,  while  the  tenth  would  have  received  his  600. 

This  gain  of  two-thirds  in  average  individual  wealth,  it 
is  to  be  especially  noted,  is  accomplished  by  the  transfer 
from  Division  2  to  Division  i  of  only  one-tenth  of  the 
population;  but  it  carries  with  it  four-tenths  of  the  total 
productivity,  or  more.  In  other  words,  with  cooperation 
substituted  for  competition  in  any  community,  including 
no  allowance  for  the  increase  in  average  individual  pro- 
ductivity properly  to  be  expected  from  production  on  a 
larger  scale,  the  better  sustenance  and  hope  of  the  opera- 
tive, etc.,  etc.,  but  considering  only  the  metamorphosis  of 
barterers  into  producers,  it  is  certain  that  the  latter  would 
be  very  much  the  gainers  and  the  former  in  no  sense  the 
losers  by  the  change. 

So  far  as  any  difficulty  of  a  single  personality's  assum- 
ing either  role  is  concerned,  this  metamorphosis  is  one  now 
undertaken  by  a  large  proportion  of  our  smaller  manufac- 
turers and  business  men  from  one  to  a  dozen  times  each 
day.  They  change  occupations,  from  producer  to  bar- 
terer  and  back  again,  each  hour,  and  are  all  unconscious  of 
the  transformation.  The  psychological  problem  of  ac- 
complishing it,  therefore,  does  not  exist.  That  the 
material  is  there,  ready  for  the  supposititious  permanent 
change,  is  a  matter  of  the  most  cursory  observation. 

The  biggest  men  of  any  industrial  community  are  uni- 
versally to  be  found  in  the  ranks  of  its  barterers.  Their 
incomes  are  bigger  even  than  they.  While  it  is  common 
for  the  incomes  of  the  barterers  to  range  from  one-half  to 
one,  or  even  seven  millions  per  year,  it  is  the  exceptional 
professional  man  who  can  secure  fifty  to  one  hundred 
thousand,  or  even  ten  thousand.  To  the  chief  adminis- 
trator of  our  national  affairs  we  allot  the  former  figure. 


i68  THE    COST    OF    COMPETITION 

The  average  income  of  the  producers  Is  about  four  hundred 
per  year. 

The  Fundamental  Law  of  Distribution 

Purchasing-Power.  According  to  the  Law  of  the 
Conservation  of  Energy,  purchasing-power  (or  Valu- 
ation) may  never  arise  except  as  the  equivalent  of  a 
preceding  production  of  Value  (see  page  153).  This 
aggregate  Value  suffers  translation  into  Valuation  before 
distribution,  however,  by  multiplication  by  the  money- 
scale,  which  was  defined  (pages  152-153)  as  the  propor- 
tion of  total  to  productive  activity.  Therefore,  so  long 
as  any  competitive  or  non-productive  effort  whatever 
exists,  so  long  as  Division  2  possesses  any  magnitude  what- 
ever, this  multiplier  will  be  greater  than  unity  and  the 
translation  of  Value  into  Valuation  will  constitute  an  infla- 
tion. That  is,  if  one-half  of  the  total  effort  of  the  com- 
munity be  expended  in  competition,  for  instance,  then  all 
prices  are  necessarily,  on  an  average,  just  twice  the  true 
value  of  the  goods.  A  given  purchasing-power  will 
return  to  the  spender  just  one-half  the  life-support  which 
it  cost,  which  it  ought  to  return  and  which  it  would  were 
there  no  barter  present. 

Looking  at  this  same  point  from  the  opposite  direction, 
— for  it  is  all-important  that  it  be  clearly  grasped, — the 
aggregate  productivity  is  just  one-half  of  what  it  might  be 
were  all  existent  activity  directed  into  the  productive  divi- 
sion of  society.  Therefore  the  aggregate  purchasing- 
power  of  the  community  will  purchase  just  one-half  of  its 
own  natural  productivity.  In  other  words,  the  average 
individual  income  will  purchase  only  one-half  of  the  aver- 
age individual's  productivity — which  is  the  average  actual 
production  per  individual.      In  brief: 


DISTRIBUTION  169 

So  long  as  any  competition  whatever  takes  place,  the 
purchasing-power  of  the  entire  community  must  be  less 
than  its  natural  producing-power  by  the  proportion  of  that 
competitive  to  the  remaining  productive  effort.^ 

Demand  and  Consumption.  It  is  difficult  to  bring 
clearly  before  the  mind  the  importance  of  this  conclusion 
in  its  bearing  upon  our  common  views  of  economic  rela- 
tionship. To  the  average  man  it  stands  as  axiomatic  that 
trade  needs  to  be  stimulated  or  else  it  would  not  exist,  that 

5  This  fact  may  be  more  clear  if  restated  in  mathematical  terms: 

Let  the  total  industrial  activity  of  the  land  be  T  and  the  portions  of  it 

which  are  directed  into  productive  and  competitive  channels,  respectively, 

be  C  and  P.     Then 

C+P=T       .         .  .  (1) 

Let  t  be  the  market-price  of  the  aggregate  commodities  created  by  the 
industrial  body,  let  p  be  the  natural  price,  or  productive  cost,  of  the  same 
and  let  c  be  the  cost  of  competition  thereover,  or  the  inflation  of  their 
value  into  their  valuation.     Then 

c  +  p^t         .  .  .  (2) 

Further, 

C  :  c=P:  p  =  T:  t  .  .  (3) 

C,  P  and  T  are  quantities  of  vital  activity,  for  which  we  have  no  units 
of  measurement;  c,  p  and  t  are  quantities  of  valuation  and  are  measurable 
in  money. 

From  Equations   (2)    and    (3)   is  derived 

But  in  any  community  where  exchange  is  operated,  under  the  protection  of 
law,  at  perfect  efficiency,  the  relation  of  purchasing  to  producing  power 
must  be  that  which  would  prevail  in  a  community  where  there  were  no 
necessity  for  exchange,  where  each  man  consumed  exactly  what  he  pro- 
duced, namely,  unity.  Since,  under  exchange,  the  purchasing-power  varies 
inversely  as  the  market-price,  other  things  being  equal,  it  may  be  said 
from  Equation  (4)  that  the  dependency  of  purchasing-power  upon  the 
volume    of   competition    may   be    stated    as    a    direct    proportionality   to   the 

c 

quantity.   1  —  "Tp 


170  THE    COST    OF   COMPETITION 

the  volume  of  trade  depends  upon  the  whim  of  the  pur- 
chaser, that  overproduction  exists  because  it  exceeds  the 
natural,  biologic  ability  of  the  community  to  absorb  and 
consume;  that,  nevertheless,  there  is  no  limit  to  the  demand 
for  labor,  so  that  any  person  really  desiring  employment 
can  find  it;  and  finally,  that  every  man  needs  artificial 
stimulation  to  labor  or  else  he  will  be  idle,  for  obviously 
if  he  is  idle  it  is  because  he  wishes  to  be.  That  these 
several  doctrines  are  not  only  hopelessly  inconsistent  with 
each  other,  but  are  almost  the  direct  opposite  of  the 
natural  facts,  it  is  a  simple  matter  to  demonstrate.  In  the 
inverse  relationship  of  volume  of  purchasing-power  to 
volume  of  competition  which  has  just  been  proven  we  are 
equipped  for  the  first  time,  however,  with  the  necessary 
means. 

The  first  step  in  this  demonstration  is  to  call  attention 
to  the  more  than  obvious,  to  the  insistent,  fact  that  to 
human  desire,  to  purely  biologic  demand,  there  is  no  limit. 
There  is  no  limit,  visible  or  imaginable,  to  the  human  con- 
sumption of  goods.  Of  any  one  commodity,  to  be  sure, 
there  is  a  natural  limit  to  consumption  per  capita.  But 
let  surfeit  in  this  one  line  be  only  just  attained  and  there 
is  already  upon  its  heels  a  hunger  for  what  was  before  not 
thought  of.  What  was  luxury,  perhaps  only  dreamed  of, 
yesterday,  is  to-day  a  matter  of  current  consumption. 
To-morrow  it  will  be  an  absolute  necessity. 

This  is  current  growth.  It  is  absolutely  wholesome. 
Not  only  is  the  worth  of  a  people  not  measured  by  the 
extent  of  its  "economy,"  its  "thrift,"  its  parsimony;  it 
is  measured  by  the  exact  opposite — by  the  amount  of 
wholesome  commodities  which  it  is  able  to  procure  and 
consume.  That  people  is  the  strongest  which  absorbs  the 
most. 

There  is  undoubtedly  such  a  thing  as  unwholesome  indi- 


DISTRIBUTION  171 

vidua!  appetite:  sometimes  exaggerated  to  gluttony  and 
extravagance;  sometimes  perverted  into  an  appetite  for 
destructive  things,  such  as  opium  or  strong  drink.  But 
in  every  case  it  proves,  upon  investigation,  to  be  merely 
the  natural  appetite  diverted  and  distorted  by  unwhole- 
some forces  which  are  wholly  extraneous  to  the  question 
of  appetite  itself. 

Another  condition  which  must  accompany  this  state- 
ment is  that  the  appetite,  in  order  to  be  wholesome,  must 
create  what  it  consumes.  In  our  present  organization  of 
society  this  is  often  far  from  true.  In  a  minority  at  the 
top  gratification  is  out  of  all  proportion  over  and  above 
the  necessity  for  creative  exertion.  In  a  majority  at  the 
bottom  the  necessity  for  creative  exertion  is  out  of  all  pro- 
portion over  and  above  the  opportunity  for  gratification. 
Appetite  is  in  the  first  case  overfed  and  under-exercised. 
In  the  latter  case  it  is  underfed  and  repressed,  and  re- 
pressed life  always  becomes  deformed. 

The  criterion  of  individual  worth  to  the  community  is 
a  hearty,  unlimited  appetite  for  all  things  good:  an 
appetite  won  from  a  hard  day's  work  behind  one — fed  the 
day  before  with  a  square  meal,  of  bodily,  mental  and 
spiritual  pabulum,  and  looking  forward  to  the  same  to-day 
and  to-morrow.  Such  an  appetite  means  vigor  of  life. 
Vigor  undertakes  and  performs  tasks  without  the  whip, 
without  hire,  without  persuasion,  without  allotment  even. 
It  makes  work  for  itself,  and  breaks  it,  for  mere  joy  of 
working.  A  man  who  does  not  desire  and  enjoy  work  is 
just  as  sick,  just  as  properly  a  public  burden,  as  he  who 
does  not  desire  his  dinner  and,  after  that,  all  other  things 
which  he  can  procure  by  wholesome  exertion  and  without 
robbery  of  other  people. 

It  is  the  prime  business  of  the  motor-nerves,  too,  to  lead 
us  to  seek  the  things  which  appetite  desires.     We  do  not 


172  THE    COST    OF    COMPETITION 

need  to  be  begged  to  buy  shoes  when  barefoot,  nor  to 
seek  food  when  hungry.  Natural  impulse  leads  us  to  do 
those  things.  If  there  were  not  an  advertisement  issued, 
not  a  soliciting  salesman  in  the  land,  all  of  the  current  pur- 
chase and  consumption  of  standard  articles  would  continue. 
Only  novelties  would  need  to  be  announced,  and  then 
merely  in  a  passive  way,  bulletin-fashion,  in  any  publicly 
understood  method  and  locality,  as  of  new  books  in  the 
book  reviews,  or  by  mere  display  in  the  single  bazaar 
which  would  then  replace  the  present  bewildering  plurality. 
But  the  bulk  of  all  advertising,  on  the  other  hand,  is  con- 
centrated not  upon  the  novelties  of  any  real  Value, — not 
mere  catch-pennies, — which  "  sell  themselves,"  but  upon 
the  staple  commodities.  There  are  no  fields  in  which 
advertising  is  more  frantic  or  competitive  introduction 
more  vehement,  than  in  the  staple  commodities :  food- 
stuffs, clothing,  soap,  steel,  house-lots,  etc.,  of  which  there 
could  be  no  possible  need  of  enticing  consumption  except 
that  the  piirchasin g-power  is  limited  to  less  than  what  is 
offered  and  that  an  artificial  reward  profit  is  attached  to 
its  enticement  in  one  direction  rather  than  another. 

This  is  the  prime  fact  of  the  situation:  that  the  limit  of 
human  consumption,  and  therefore  of  economic  demand, 
of  volume  of  trade,  of  factory-activity  and  of  the  market 
for  labor,  is  not  at  all  dependent  upon  any  factor  of 
biologic  desire,  individual  whim  or  personal  will,  all  of 
which  possess  no  limits  whatever,  but  upon  the  purely 
economic  factor  of  purchasing-power.  And  while  there 
is  room  for  endless  argument  as  to  the  ability  of  the  indi- 
vidual will  to  affect  the  purchasing-power  of  one  individual 
as  compared  with  another,  there  is  no  chance  whatever 
for  argument  as  to  his  ability  to  control  the  total  purchas- 
ing-power, by  means  of  either  advertising  or  solicitation. 
For  if  any  individual,  with  the  help  of  any  purely  biologic 


DISTRIBUTION  173 

factor  within  himself  whatever,  should  succeed  In  expand- 
ing his  vital  activity,  skill,  endurance,  etc.,  with  the  object 
of  thus  expanding  his  purchasing-power,  he  expands  simul- 
taneously his  and  the  community's  potentiality  for  produc- 
tive power.  If  he  direct  his  new  activity  Into  productive 
lines,  he  expands  both  the  purchasing-power  and  the  pro- 
ductive power  of  the  community  equally.  If  he  direct 
it  Into  competitive  lines,  he  may  expand  his  own  purchas- 
ing-power, at  the  expense  of  others,  but  he  has  left  un- 
touched the  total  volume  of  purchasing-power  and  there- 
fore the  economically  limited  volume  of  production. 

The  Important  conclusion  to  be  drawn  from  this  argu- 
ment is  that  the  present  existing  and  universally  accepted 
fact  that  there  should  always  be  more  sellers  than  buyers 
and  more  laborers  than  vacancies,  with  the  seller  and  the 
laborer  always  maintaining  a  natural  attitude  of  solicita- 
tion, Is  a  purely  unnatural  and  artificial  situation;  Indeed, 
that  It  Is  quite  the  reverse  of  the  natural.  Naturally,  ex- 
change should  be  sought  solely  by  the  buyer,  who  alone 
proposes  to  enjoy  the  subsequent  consumption  of  the 
goods.  Similarly,  the  employer  should  seek  the  chance  to 
employ  his  man,  with  the  same  avidity  and  partial  lack  of 
success  as  we  each  of  us  seek  time  and  strength  for  doing 
what  we  ourselves  desire  to  do.  The  sole  reason  why  this 
Is  not  so  to-day  is  the  presence  of  an  enormous  volume  of 
competitve  effort  In  the  community.  This  presence  exerts 
a  twofold  evil  effect  upon  the  atmosphere  of  both  trade 
and  employment.  In  trade  it  (a)  accompanies  the 
privilege  of  trade  with  the  privilege  of  taxing  the  trader, 
and  (b)  reduces  the  volume  of  purchasing-power.  Both 
processes  lead  to  the  crowding  of  men  Into  trade,  as  pref- 
erable to  labor,  and  to  their  frantic  jostling  of  each  other 
to  secure  to  themselves  and  away  from  the  others  the 
limited  field  for  exchange.      It  likewise  operates,  in  em- 


174  THE    COST    OF    COMPETITION 

ployment,  (a)  to  accompany  the  privilege  of  employing 
others  with  the  privilege  of  retaining  a  portion  of  their 
productivity,  and  (b)  to  the  restriction  of  the  volume  of 
manufactures  to  less  than  the  available  volume  of  produc- 
tive labor.  Therefore  the  cool  indifference  of  the  buyer, 
and  the  struggle  of  the  seller  to  secure  his  favor,  find  com- 
plete counterpart  in  the  cool  indifference  of  the  employer 
to  the  string  of  applicants  for  work  which  he  finds  at  his 
door  each  morning  and  in  the  struggle  of  the  laborers  to 
secure  the  limited  opportunity  open  to  them. 

Since  the  demand  for  labor  in  the  factories  depends 
solely  and  directly  upon  the  volume  of  exchange  currently 
effected  with  the  ultimate  consumer  in  the  retail  shops,  it  is 
sufficient  to  discuss  the  latter  alone,  as  covering  both.  To 
this  end  it  is  important  to  scrutinize  carefully  the  nature 
of  the  efforts  of  the  barterers  in  their  desire  to  "  promote 
trade."  Upon  examination  it  appears  that  their  aim  is 
by  no  means  to  swell  the  total  volume  of  trade.  Instead, 
it  is  to  divert  what  volume  already  exists  into  their  own 
market,  in  preference  to  having  it  pass  through  some  other 
barterer's  hands.  Indeed,  their  constant  effort  is  to  restrain 
trade — to  restrain  the  trade  of  their  competitors.  For  the 
total  volume  of  trade  they  care  only  this  much,  that  plainly 
the  less  the  permitted  volume  of  exchange  the  higher  are 
prices,  and  the  higher  are  prices  the  greater  are  their 
profits.  The  proportion  of  the  total  volume  which  passes 
their  way  is  all  they  care  for.  If  their  absolute  quantity 
has  remained  constant  while  its  proportion  to  the  whole 
increases,  because  the  total  volume  has  decreased,  they  are 
the  winners  thereby;  for  they  are  making  greater  profits 
from  the  higher  prices  while  called  ,upon  to  do  no  more 
work  in  the  way  of  handling  goods. 

In  the  offering  of  money-reward  in  the  'form  of  profit 
for  the  prosecution  of  competition,  the  public  is  maintain- 


DISTRIBUTION  175 

ing  a  policy  which  could  naturally  result  only  In  just  these 
results,  and  no  others.  That  the  barterers  respond  to  It 
with  prodigious  effort  at  the  elevation  of  prices,  the  re- 
striction of  output,  the  control  of  the  labor-market  and  the 
long  list  of  other  things  which  the  public  does  not  want 
done  which  constitute  the  present  Industrial  problem,  is  the 
fault  of  the  public  and  not  of  the  barterers.  Until  it 
learns  this  fact  there  is  no  hope  of  remedy  for  the  situation. 
It  must  learn  that  If  It  wishes  prices  kept  down  it  must 
adopt  a  policy  which  sends  the  greatest  rewards  to  him 
who  lowers  prices,  instead  of  to  him  who  raises  them. 
If  It  wishes  purchasing-power,  volume  of  trade  and  de- 
mand for  labor,  to  Increase,  it  must  first  reduce  the 
volume  of  the  only  thing  which  restricts  these  items  below 
their  natural  limit,  namely:  the  volume  of  competition. 
As  the  first  and  most  essential  step  In  the  public's  learning 
this  lesson,  it  will  be  repeated  that  the  sole  limitation  to 
the  gratification  of  spontaneous  desire  for  all  things  and 
especially  for  novelties,  the  sole  factor  in  determining  the 
total  volume  of  trade,  is,  not  desire,  hut  PURCHASING- 
POWER,  and  that  the  one  thing  which  limits  purchasing 
power,  by  inflating  the  money-scale,  is  COMPETITION.  It 
Is  only  because  barter  exists,  constituting  economic  dis- 
sipation, scattering  to  the  winds  the  economic  power  of 
the  individual,  that  any  effort  Is  needed  to  dispose  of 
goods.  There  is  no  such  thing.  In  a  natural  sense,  as  the 
"  overproduction  "  of  which  so  much  complaint  is  com- 
monly heard.  The  prime  actual  fact  is  "  underpurchas- 
Ing-power,  "  is  a  purchasing-power  artificially  limited  by 
the  presence  of  barter, — by  the  barter-cost  of  that  very 
advertising  or  similar  effort  which  seeks  to  promote  pur- 
chase,— below  natural  desire  and  below  natural  produc- 
tivity. Thus  does  barter  feed  upon  and  block  Exchange, 
that  natural  circulation  between  production  and  consump- 


176  THE    COST    OF    COMPETITION 

tion  which  it  apparently  is  its  sole  blundering  aim  to 
promote. 

The  Labor  Market.  The  second  broad  conclusion 
to  be  drawn  from  this  limitation  of  purchasing-power  by 
the  presence  of  barter,  and  one  of  even  greater  importance 
to  the  community,  is  this : 

The  demand  for  productive  labor  is  less  than  the  supply; 
each  opportunity  for  its  exertion  becomes  the  center  of 
competitive  search  by  the  producers,  just  as  each  oppor- 
tunity for  a  sale  is  a  prize  to  the  sellers.  The  man  seeks 
the  chance  to  work,  instead  of,  as  alone  is  natural,  his 
exercising  a  choice  between  several  opportunities,  between 
several  sorts  of  work,  each  of  which  seeks  the  man  to  do 
it, — choosing  the  sort  which  he  can  really  do  the  best. 

It  will  be  immediately  replied  to  this,  by  all  those  who 
have  engaged  in  the  employment  of  labor,  that  the  latter 
is  now  the  case,  that  employers  are  in  constant  difficulty 
in  attempting  to  find  men  able  to  do  a  certain  grade  of 
work  as  they  wish  it  done.  This  is  undoubtedly  true.  It 
is  a  broad  fact  which  splendidly  upholds  the  present 
analysis.  F^or  this  ungratified  search  for  the  right  man 
is  always  limited  by  a  factor  which  does  not  find  such 
enthusiastic  promulgation  at  the  hands  of  the  employer 
as  does  his  dissatisfaction  with  his  employees;  of  the  exist- 
ence of  which,  indeed,  to  its  full  import,  he  is  unconscious, 
viz. :  that  the  purchasing-power  zvhich  rewards  the  work 
is  just  about  one-third  of  that  naturally  accompanying  the 
class  of  productivity  which  he  desires.  For  the  wages 
paid  is  the  Value  produced  by  the  workman,  paid  to  him 
in  the  form  of  its  Money-valuation.  Because  of  the  gen- 
eral dissipation  by  barter  throughout  the  land,  and  not 
because  of  the  workman's  individual  employer,  his  pay 
becomes  divided  by  three  when,  in  his  purchases  in  the 


DISTRIBUTION  177 

open  market,  he  translates  it  from  Money-valuation  back 
into  material,  life-supporting  Value  of  commodities. 

It  is  of  course  not  to  be  said  that  the  employer  could 
arbitrarily  multiply  his  wages  to  each  man  by  three,  so  as 
to  counteract  this  lapse  from  the  natural,  if  he  only  would. 
It  has  already  been  barely  stated,  and  it  will  be  often 
emphasized  hereafter,  that  the  employer,  because  of  his 
competition  with  his  fellows,  is  stripped  of  all  surplus 
income  and  opportunity,  under  the  same  sort,  if  not  the 
same  degree,  of  pressure  as  is  the  laborer.  Because  the 
employer's  life  is  upon  a  generally  more  comfortable  plane 
than  that  of  his  employees  it  is  incidentally  true  that  he 
might  raise  wages  somewhat  if  he  chose.  But  it  would 
amount  to  little  for  each  man,  nor  would  it  be  permanently 
effective.  What  is  referred  to  here  is  quite  a  different 
matter:  that  the  wages  accorded  to  any  position  open  for 
applicants  will  buy  in  the  open  market,  because  of  the 
inflated  Money-scale,  only  one-third  of  what  they  naturally 
ought  and  otherwise  would  if  the  inflation  were  absent. 
The  inflation  referred  to  here  is  that  of  prices  due  to  add- 
ing to  the  cost  of  production  the  cost  of  barter.  And  this 
inflation  is  due  not  to  what  any  individual  employer 
abstracts  from  his  own  employees,  but  to  the  value  cur- 
rently dissipated  throughout  the  entire  land  by  the  presence 
of  barter,  conducted  by  all  the  employers  and  capitalists 
together,  in  connection  with  all  commodities  sold.  There- 
fore the  obstacle  against  which  the  employer  is  wearing 
himself  out,  in  attempting  to  obtain  suitable  labor,  is  not 
a  lack  of  producers;  each  advertisement  brings  six  appli- 
cants for  one  opportunity.  It  is  against  the  fundamental 
law  of  the  parasite  Barter  that  he  is  fretting:  that  it  leaves 
in  the  producer's  hands,  through  the  employer  as  its  agent, 
only  sufficient  income  to  maintain  life  in  a  stationary,  or 
very  nearly  stationary,   position,  without  progress  in  in- 


178  THE    COST    OF   COMPETITION 

telligence  or  vim  to  the  degree  which  the  country,  includ- 
ing the  employer,  would  gladly  have  him  possess. 

From  all  of  these  considerations  does  it  appear  that 
seller,  laborer  and  employer  are  alike  seeking  that  which 
is  not  to  be  found:  the  wasted  opportunity  brought  back 
to  life.  For  the  opportunity  to  buy  and  consume,  the 
opportunity  to  work  and  earn  and  the  opportunity  to  pay 
wages  high  enough  to  attract  intelligence  and  ability,  were 
alike  lost  to  the  community,  in  their  greater  proportion, 
when  Barter  arose  to  its  present  enormous  dimensions, 
under  modern,  and  especially  American,  political  and  geo- 
graphical liberty,  to  eat  the  heart  out  of  natural,  free 
exchange  between  man  and  man. 


The  Second  Law  of  Distribution 

Dissipation.  Economic  Dissipation,  taken  as  an  ag- 
gregate, always  tends  to  the  maximum  bearable  by  Pro- 
duction. 

This  law  holds  true  of  either  of  the  subdivisions  of  Dis- 
sipation: Rent,  Interest,  Gross  Profits,  Barter-cost  and 
Net  Profits,  except  as  they  interfere  with  and  counter- 
balance each  other  in  their  parallel  growth.  In  general, 
excepting  barter-cost,  they  tend  to  increase  equally. 

The  truth  of  this  law,  if  not  already  axiomatic  from 
what  has  been  seen  of  the  elementary  nature  of  barter, 
becomes  further  evident,  by  inspection,  upon  two 
counts : 

(i)  The  gain  allotted  to  effort  in  barter,  per  unit  of 
time,  is  very  much  greater  than  that  allotted  to  productive 
labor.  This  leads  to  constant  influx  of  population  into 
the  competitive  from  the  productive  walks  of  life.  This 
is  one  of  the  two  great  forces  back  of  that  growth  of  the 


DISTRIBUTION  179 

city  which  has  so  markedly  characterized  the  last  half- 
century.  The  country  districts  are  naturally  confined 
mostly  to  productive  effort.  The  cities,  particularly  the 
largest  ones,  while  they  also  compass  much  productive 
effort,  are  the  shelters  of  the  greater  part  of  all  barter. 
Production,  involving  only  the  man,  the  soil,  the  tools  and 
natural  forces,  can  be  carried  on  in  comparative  isolation. 
It  is  not  only  our  agriculture  and  mining  that  are  scattered 
over  the  breadth  of  the  land,  but  our  factories  as  well, 
dotting  the  maps  with  minor  towns  and  cities  whose 
population  is  almost  exclusively  productive.  But  each 
factory  has  its  New  York  or  Chicago  office,  and  usually 
no  business  can  get  to  or  from  the  factory  except  through 
these  centers  of  competition.  Barter,  on  the  other  hand, 
involving  solely  the  relations  between  man  and  man,  can 
be  carried  on,  at  its  best,  only  where  the  population  is  con- 
gested into  the  closest  possible  contact,  for  the  maximum 
ease  of  intercommunication. 

(2)  In  barter  the  gain  is  not  limited  to  proportionality 
to  the  period  of  exertion,  as  it  is  in  productive  effort. 
Whereas  no  amount  of  skill,  in  a  given  state  of  the  arts 
and  excluding  inborn  genius,  can  exalt  the  income  of  a 
producer  beyond  a  certain  fairly  well-defined  point,  there 
seems  to  be  no  limit  yet  visible  to  the  capacity  of  a  barterer 
for  acquiring  wealth  per  unit  of  time. 

(3)  The  power  of  the  barterer  over  the  producer  in- 
creases in  geometric  ratio  to  his  success.  Thus,  a  man 
possessing  capitalism  to  the  amount  of  $10,000  will  re- 
ceive a  certain  current  percentage  from  using  it  'n  barter, 
and  with  a  certain  degree  of  uncertainty  attached;  a  man 
In  the  same  line  of  business  to  the  amount  of  $10,000,000 
(or  to  the  same  proportion  of  actual  value  of  property) 
will  make  his  securities  earn  more  per  dollar  and  will  be 
much  more  certain  of  the  continuance  of  his  income  than 


i8o  THE    COST    OF    COMPETITION 

will  the  first.  This  is  not  the  day  of  the  small  capitalist 
nor  of  the  minority  stockholder. 

That  is  to  say,  the  average  income  of  each  individual 
bargainer  tends  to  increase,  as  well  as  does  the  number  of 
bargainers. 

Wages.  The  second  law,  stated  in  terms  of  Produc- 
tion, instead  of  Dissipation,  runs  as  follows: 

JVages,  taken  as  an  aggregate,  always  tend  to  the 
minimum  bearable  by  Production. 

That  is,  since  wages  =  Value-production  minus  Dissi- 
pation-by-Barter,  as  the  latter  tends  uniformly  to  increase, 
as  a  proportion  of  the  whole,  wages  must  similarly  tend  to 
proportional  decrease.  This  does  not  necessarily  mean 
that  the  wage-rate  is  on  the  decrease.  The  wages  paid  in 
dollars  and  cents  include  four  distinct  factors,  which  must 
all  be  considered  before  any  indication  can  be  had  as  to  the 
welfare  of  the  recipient,  viz.:  {a)  the  wage-rate;  {b) 
the  proportional  time  of  employment  to  the  total  time; 
(t)  the  average  price  of  commodities;  {d)  the  scale  of  the 
productive  arts  and  of  life  in  general  at  the  period  and 
locality  in  question.  Each  of  these  factors  varies  con- 
stantly. Each  has  had  a  whole  literature  devoted  to  its 
details.  To  none  of  them  need  any  space  be  given  here. 
Our  argument  is  a  blanket  one.  The  welfare  of  the  indi- 
vidual depends  solely  upon  his  income  of  Value  and  its 
relation  to  that  enjoyed  by  his  neighbors;  he  cares  nothing 
about  its  valuation  in  dead  dollars  and  cents.  And  if  a 
steadily  increasing  proportion  of  the  community's  current 
product  of  Value  goes  to  Barter,  a  steadily  decreasing  pro- 
portion must  be  left  available  for  Wages. 

There  are  two  prime  forces  influencing  the  average 
wage-value.  One  of  these  is  the  aggregate  productivity 
of  the  wage-earners  of  the  community.  The  other  is  the 
aggregate  volume  of  barter  in  the  land.      According  to  the 


DISTRIBUTION  i8i 

Second  Law,  this  latter  factor  always  exerts  a  downward 
pressure.  Whether  It  be  sufficient  in  power  to  countervail 
the  forces  tending  to  expand  productivity,  to  the  develop- 
ment of  a  current  net  decrease  in  wages,  is  not  the  ques- 
tion before  us.  The  law  merely  states  that  the  presence 
of  barter  always  acts  to  make  wages  less  than  they  other- 
wise zvoiild  be,  and  as  much  less  as  the  producer  can  stand. 

Natural     Growth     vs.    Artificial     Degeneration. 

— It  is  properly  to  be  pointed  out,  however,  that  the  sole 
force  which  tends  to  elevate  wages  is  biological  and  techni- 
cal growth.  The  struggle  between  the  tvvo  forces  in  their 
determination  of  resultant  equilibrium,  therefore,  is  one 
of  money-seeking-protected-by-law  against  life.  It  will  be 
developed,  as  we  proceed,  that  while  the  net  result  of  the 
contest,  for  the  entire  community,  is  and  must  be  slow 
progress,  as  of  a  tug-of-war,  yet  for  a  certain  large, 
though  minor,  fraction  of  the  community  it  must  always 
mean  retrogression  and  degeneration. 

The  Wage-System.  This  law  of  wage-depression  by 
Barter  also  holds  true  for  all  the  subdivisions  of  wages, 
into  professional  fees,  salaries  and  payrolls,  down  to  the 
individual  wage-income,  except  as  each  tends  to  counter- 
balance the  other.  In  general,  they  all  tend  to  decrease 
equally.  The  doctors  and  the  artists  are  packed  into  the 
same  box,  and  under  the  same  pressure,  for  all  that  they 
lie  in  the  upper  layers,  as  are  the  mechanics  and  the 
laborers. 

The  truth  of  this  law  is  evident  in  two  directions: 
( I )  /;/  the  Competitive-wage  System. — This  system, 
coupled  with  the  fact  that  there  are  always  more  laborers 
than  opportunities  to  labor,  enforces  the  law  in  regard  to 
individuals.  Each  individual,  In  securing  a  job.  Is  forced 
to  accept  It  at  the  lowest  possible  Income  upon  which  he 


i82  THE    COST    OF    COMPETITION 

can  survive,  reproduce  and  maintain  his  level  in  society 
and  in  economic  efficiency. 

(2)  /;/  the  Depejidence  of  the  Factory  upon  the  City- 
office. — Viewing  class-aggregates,  the  bargaining  division 
holds  the  complete  advantage  over  the  producer-division. 
Labor  to-day,  unless  it  can  find  access  to  land,  tools  and 
exchange, — that  is,  to  capital  and  a  marlcet, — is  as  help- 
less for  its  own  support  as  if  every  muscle  were  paralyzed. 
There  was  a  time  when  an  alternative  was  open  to  it,  when 
it  could  choose  between  specialization,  adopting  machine- 
methods,  on  the  one  hand,  and  hand-trade  distributed  over 
several  trades  on  the  other.  Then  barter  could  exact,  for 
the  privileges  of  exchange,  only  the  bulk  of  the  superiority 
of  specialization  with  tools  over  Jack-at-all-trades  hand- 
production,  but  no  more.  Now  this  limit  has  almost 
entirely  disappeared.  The  superiority  of  the  factory- 
method  is  so  great  as  to  have  entirely  displaced  the  other. 
The  producer  attempting  to  cling  to  hand-methods  cover- 
ing the  bulk  of  even  his  bare  needs:  food,  clothes  and 
shelter,  as  did  our  grandparents,  or  to  hand-make  any  one 
of  these  needs  and  market  his  product  unaided,  would  liter- 
ally starve. 

That  the  limit  is  still  there,  although  almost  invisible, 
and  that  barter,  in  its  avarice,  still  presses  the  working- 
people  hard  against  it,  is  evident  from  the  sporadic  sur- 
vival of  tenement,  sweatshop  and  household  industries  in 
the  face  of  the  far  superior  factory-methods.  But  even 
these  are  helpless  in  the  hands  of  the  professional  bar- 
gainers when  it  comes  to  marketing  their  goods.  They 
suffer  as  much  then,  in  the  exactions  of  the  sweater,  as 
does  the  factory-hand,  at  an  earlier  stage  in  production,  in 
paying  his  interest  upon  factory-capitalization.  The 
whole  phenomenon  is  of  interest  more  as  a  relic  of  the 
past:    a    superannuated    provision    against    the    grasp    of 


DISTRIBUTION  183 

avarice,  an  ancient  but  now  ruined  wall  against  the  bar- 
barian, than  it  is  as  a  thing  of  any  modern  effectiveness  for 
the  amelioration  of  labor's  lot. 

With  every  advance  of  the  arts  and  sciences,  introduc- 
ing automatic  machine  labor-savers  where  before  indi- 
vidual effort  was  relied  upon,  correlating  industries  which 
before  were  independent,  the  ascendency  of  the  factory- 
method  over  hand-production  becomes  more  complete  and 
irrevocable.  With  each  such  step  in  advance  the  Pro- 
ducer and  Consumer  alike  become  one  degree  more  help- 
less in  the  hands  of  Barter.  All  modern  complex  machine- 
methods,  the  attainments  of  self-devoted  students  and  in- 
ventors, aimed  at  the  liberation  of  mankind  from  toil,  only 
succeed  therefore  (in  so  far  as  Barter  can  prevail  against 
Humanity)  in  riveting  additional  chains  upon  the  suffer- 
ing millions.  There  is  progress  upwards,  because  the 
growth  both  of  mere  numbers  and  of  ethical  standards 
compels  it;  but  it  is  made,  every  inch  of  it,  against  the 
stoutest  resistance  which  grasping,  self-feeding,  parasitical 
Barter  can  maintain.     (See  Fig.  12a,  p.  257.) 

It  is  chiefly  these  advances  in  machine-methods,  which 
have  been  more  rapid  during  the  past  fifty  years  than  ever 
before,  coupled  with  the  material  conquest  of  the  continent 
and  the  abolition  of  slavery,  which  have  sown  the  seed  and 
freed  the  ground  for  such  a  growth  of  Barter  during  that 
time  as  economic  history  has  never  before  recorded.  This 
phenomenal  growth  will  mark  this  present  period,  in  the 
centuries  to  come,  not  as  the  age  of  steam,  nor  of  steel, 
nor  of  electricity:  those  are  all  yet  to  come,  in  their  full- 
ness; but  as  the  age  of  Barter,  for  that  is  soon  to  go,  to 
drop  away  into  the  traditions  of  the  ages,  along  with 
superstition,  slavery  and  the  feudal  system,  as  the  chief 
heraldic  emblem  of  a  luxurious  and  bewildering,  but  brutal 
and  barbaric,  nineteenth  century. 


t84  the    cost    of    COMPETITION 

The    Producing  Division    Subdivided 

The  Starvation-Wage.  A  restatement  of  the  First 
Law  of  Distribution,  in  the  form  of  the  "  First  Law  of 
Wages,"  may  be  made  in  the  following  form: 

In  each  class  or  level  of  productive  effort,  as  a  result  of 
internal  competition  for  the  opportunity  to  labor,  the 
majority  of  its  individuals  are  led  to  accept  the  least  in- 
come upon  which  they  can  succeed  in  surviving,  reproduc- 
ing and  maintaining  their  social  and  economic  level.  This 
income  is  known  as  THE  STARVATION-WAGE  for  that 
class. 

The  word  starvation  is  used  here  in  a  technical  sense. 
That  it  may  not,  in  some  levels  of  industry,  become  liter- 
ally true,  is  not  to  be  urged;  for  it  certainly  does  become  so. 
But  on  the  other  hand,  in  the  majority  of  the  more  skilled 
grades  of  industry  the  term  is  properly  to  be  interpreted 
in  connection  with  the  words  "  maintaining  their  social 
and  economical  level."  The  starvation-wage  may  thus 
be,  In  certain  classes,  $1000,  or  even  $5000,  per  year,  as 
well  as  the  few  hundreds  which  applies  to  the  unskilled 
classes.  A  given  skill  in  industry  always  demands.  In 
biological  equilibrium,  a  certain  corresponding  scale  of 
life  in  other  lines.  No  man's  family  can  live  in  a  two- 
room  tenement  and  he  continue  long  to  earn  the  same 
wages  as  If  they  lived  in  his  own  modest  house  and  lot.  If 
a  producer  be  forced  to  abandon  his  social  pride  and  self- 
respect  he  abandons  with  It  his  ambition,  intelligence, 
energy  and  skill. 

The  Prosperous  Producers.  In  each  such  class  or 
level  of  productive  effort  there  is  a  minority  who  receive 
more  than  the  starvation-wage. 

These  are  the  ones  especially  favored  in  parentage  or  in 
opportunity.     As   an    Immediate    result   of   their   margin 


DISTRIBUTION  185 

of  productivity  over  necessary  consumption,  they  are 
engaged  in  growth.  One  or  two  generations  later  will 
see  the  family  pass  out  of  that  economic  level  into  a 
higher  one;  where  they  may  then  be  receiving  the  starva- 
tion-wage, indeed,  but  in  a  class  where  it  possesses  a  much 
more  comfortable  significance  than  before.  This  growth 
diminishes  the  number  above  the  starvation-wage  in  the 
lower  class  and  swells  the  ranks  of  the  starvation-wage  in 
the  upper  class.  This  is  why  the  proportion  above  the 
starvation-wage  in  any  class  always  tends  to  a  minimum, 
and  is,  at  its  greatest,  always  a  minority. 

The  Unemployed.  The  fact  that  the  aggregate  pur- 
chasing-power of  the  community  is  always  less  than  its 
aggregate  productivity  (see  page  169),  leads  to  the  "  Sec- 
ond Law  of  Wages,"  viz. : 

In  each  such  class  or  level  of  productive  effort  there 
must  be  another  minority  receiving  LESS  than  the  starva- 
tion-wage, which  they  would  be  glad  to  get  if  they  could. 
These  individuals  are,  more  or  less  completely,  enforcedly 
idle. 

The  Submerged  Tenth.  In  the  lowest  level  of 
productive  effort,  that  of  unskilled  labor,  the  Unemployed 
constitute  the  submerged  tenth. 

Unemployment  a  Function  of  Barter,  or  Compe- 
tition. The  primary  proof  of  the  existence  of  this  claim 
is  the  deficit  in  purchasing-power  below  productivity,  which 
was  elaborated  upon  pages  169  and  170.  It  enables  the 
following  law  to  be  added  directly  to  the  preceding: 

The  average  proportion  of  Enforcedly  Idle  in  the  sev- 
eral classes  of  industry,  or  of  the  Submerged  Tenth  to  the 
total  population,  is  a  direct  function  of  the  proportion  pre- 
vailing between  Competitive  and  Total  Economic  effort. 

This  function  is  not  a  simple  proportion.      It  is  one  too 


1 86  THE    COST    OF    COMPETITION 

complex  for  quantitative  establishment  at  present.  But 
the  line  of  forces  which  produce  It:  Barter  abstracting 
energy  and  ability  from  the  ranks  of  Production;  the  con- 
sequent deficit  in  aggregate  Purchasing-Power  below  Pro- 
ductivity; the  synonymous  current  surplus  of  Productivity 
over  Market  Demand — all  show  the  characteristic  inevi- 
tableness  of  a  chain  of  cause  and  effect. 

The  Futility  of  Statistical  Argument.  To  at- 
tempt to  prove  or  disprove  these  things  by  statistics  Is 
futile,  though  statistics  may  throw  much  light  upon  them. 
To  make  such  attempt  were  like  pouring  a  barrel  of  water 
into  the  Hudson  River  at  Albany  and  attempting  to 
prove,  by  gauging  the  flow  at  New  York,  that  a  barrel  of 
water  more  than  usual  went  Into  the  sea.  Nevertheless 
we  know  absolutely  that  water  Is  Indestructible  and  that 
the  pouring  of  any  quantity  Into  the  river  at  Albany,  other 
things  being  unchanged,  must  Increase  by  like  amount  the 
flow  at  New  York.  Similarly  we  know  absolutely  that 
nothing  will  produce  value,  life-support  and  purchasing- 
power  except  productive  efi^ort;  that  for  each  atom  of 
activity  which  climbs,  seeking  Success,  from  productive, 
wage-earning  levels  Into  non-productive,  profit-earning, 
competitive  fields  an  equivalent  atom  of  life  is  depressed 
from  productive,  wage-earning,  self-sustaining  levels  Into 
the  non-productive,  pauperized  level  of  Enforced  Idle- 
ness, that  equilibrium  may  be  maintained.  As  the  prin- 
ciple of  the  Conservation  of  Matter  declares  the  truth  In 
the  flow  of  water,  so  the  principle  of  the  Conservation 
of  Economic  Energy  enlightens  the  case  of  the  Profit- 
maker  and  the  Submerged  Tenth.  Human  life  Is  drawn 
into  these  non-productive  extremes,  against  humanity,  con- 
science and  all  higher  Ideals,  as  water  is  drawn  into  the 
clouds  and  into  the  depths  of  the  sea:  by  the  Inflated  life 
of  illumined  ease  at  the  top,  by  the  quiescent  Irrespon- 


DISTRIBUTION  187 

sibillty  in  the  darkened  depths.  It  Is  axiomatic  that  noth- 
ing win  alter  this  phenomenon  except  the  reversal  of  this 
temporary  and  artificial  force  of  gravitation  and  the 
award  of  the  material  prizes  of  life  to  the  productive 
effort  which  creates  them,  and  the  allotment  of  nothing, 
of  mere  want  and  humiliation,  instead  of  inflated  money- 
command  of  men,  to  the  competitive  effort  which  wastes 
them;  that,  until  this  be  done,  to  try  to  employ  the  unem- 
ployed is  as  trying  to  pump  out  the  sea. 

The  Irrelevance   of   Psychic   Forces. — Nor  can 

the  situation  be  at  all  enlightened  by  any  inquiry  as  to 
whether  or  not  any  individual  among  the  unemployed 
desires  employment.  When  they  first  lose  it  they  do,  of 
course.  But  after  a  certain  amount  of  futile  wandering 
in  search  of  work  the  natural  desire  to  work  dies  out. 
The  man  becomes  a  tramp  and  the  woman  the  same, 
though  we  call  her  a  worse  name.  Desire  for  or  against 
work  has  something  to  do  with  which  individual  is  chosen 
for  Idleness.  It  has  nothing  whatever  to  do  with  the 
number  force-drafted  into  its  ranks.  It  is  as  if  a  regiment 
were  to  be  selected  from  a  community  according  to  short- 
ness of  stature:  thick  soles  to  one's  shoes  might  avail  to 
keep  some  man  out;  but  it  would  inevitably  force  in 
another  who  otherwise  would  have  gone  free.  The  pres- 
sure of  barter,  crowding  down  upon  purchasing  power, 
is  arrested  only  by  a  counter-pressure  of  life  refusing  to 
die.  A  certain  volume  of  life,  engaged  in  this  slow  pro- 
cess, must  be  currently  in  existence,  as  a  public  burden  in 
almshouse,  prison,  asylum  or  slum,  in  consequence. 
Whether  its  resistance  be  voiced  intelligibly,  as  from  the 
laborer  seeking  hire,  or  more  obscurely,  as  from  the  con- 
stant menace  to  public  security  latent  in  the  tramp,  the 
footpad  and  the  grafter,  makes  no  difference  to  the 
limitation  of  aggressive  barter.     The  prime  point  is  this: 


i88  THE    COST    OF    COMPETITION 

that  Barter,  in  its  strenuous  keenness,  insists  ever  that  the 
resistance  shall  be  stout,  or  It  will  bear  it  still  further 
down.  It  is  only  Industrial  idleness,  coupled  either  with 
fresh  diligence  and  organization  when  recently  imposed, 
or  with  hardened  violence  when  older  and  grown  callous, 
— the  Idleness  of  organized  labor  or  that  of  the  desperate 
criminal, — that  may  constitute  a  substratum  of  life  suffi- 
ciently compacted  to  hold  Barter  up  and  keep  It  at  bay.* 

The  Dilution  of  Enforced  Idleness.  Nor  must 
all  of  this  volume  of  idleness  be  expected  to  appear  in  the 
form  of  a  population  each  member  of  which  does  nothing 
at  all.  They  nearly  all  do  a  little,  during  a  part  of  the 
time.  Some  do  nearly  as  much  as  will  earn  the  starvation- 
wage.  But  they  are  all  below  It,  slowly  starving — 
usually  under  more  comfortable  names :  such  as  consump- 
tion. Infantile  colic,  etc.^     It  is  this  modern  question  of 

6  A  university  professor  is  reported  by  the  Search-Light  as  having 
studied  the  tramp-question  in  England  by  interviewing  some  2000  wan- 
dering beggars  as  to  why  they  did  not  support  themselves  by  work.  Will- 
ingness to  work  but  inability-  to  find  employment  was  expressed  by  653, 
or  32  per  cent.,  of  them;  the  answers  of  445  were  vague;  301  expressed 
the  opinion  that  "  no  one  ought  to  be  obliged  to  work,  but  if  some  fools  did 
so  they  [the  vagrants]  were  justified  in  living  on  them";  407  alleged 
plans  for  procuring  work  at  certain  far-off  localities;  the  remaining  194 
were  living  in  hope  until  their  relatives  should  die  and  leave  them  money. 
As  a  study  in  psychology  these  statistics  are  probably  reliable  and  of  value. 
They  show  the  proportion  of  those  who  are  still  honestly  seeking  employ- 
ment as  one-third  of  the  whole,  while  those  who  have  been  degenerated 
by  the  enforced  idleness  or  other  causes  into  indifference  constitute  the 
remaining  two-thirds.  But  as  an  indication  of  the  true  cause  of  economic 
idleness  they  are  absolutely  worthless.  No  sane  man  would  think  of 
approaching  these  two  thousand  unfortunate  individuals  as  a  source  of 
reliable  information  upon  any  other  topic.  How  can  they  be  expected  to 
give  it  upon  the  unusually  difficult  one  of  political  economy? 

^  A  recent  article  from  the  pen  of  an  eminent  physician,  treating  of  the 
possibility  of  eradicating  tubercular  consumption  from  the  community, 
gives  the  following  list  of  measures  necessarily  to  be  adopted  by  the  people 
to  this  end:  (i)  Fresh  air;  (2)  ample  nutrition;  (3)  complete  rest.  How 
compatible   is  this  prescription   with   a   starvation-wage,  or  less! 


DISTRIBUTION  189 

the  proportion  of  idleness  in  the  time  of  each  nominally 
employed  laborer  which  is  upsetting  all  of  the  old- 
fashioned  conclusions  based  upon  mere  rate  of  wages, 
now  able  to  throw  almost  no  light  upon  the  laborer's  true 
economic  condition.  It  is  this  partial  employment  which 
enables  so  few  and  such  weak  ones  to  successfully  counter- 
balance the  enormous  might  of  the  competitive  organiza- 
tion :  they  starve  so  slowly  that  each  one  counts  for  a  good 
deal  of  resistance.  The  resistance  of  life  to  degeneration 
and  death  is  ever  astounding:  courage,  self-respect  and 
physical  constitution  wear  away  so  very  slowly.  So  that 
it  is  a  kindly  plan,  in  one  aspect,  this  plan  of  partial 
employment:  it  breaks  the  suddenness  of  fall  into  want 
and  degradation,  substituting  for  it  a  slow  gravitation, 
as  into  quicksand,  from  the  respectable  poverty  of 
unskilled  labor  into  the  immeasurable  depths  of  chaos 
below,  where  there  is  no  self-respect,  no  courage,  no  moral 
or  bodily  stamina — only  incoherent  drifting  where  chance 
currents  may  direct,  only  pauperism,  disease,  crime  and 
insanity:  life  appearing  to  its  wretched  votaries  as  a  vague 
nebula  of  uniformed  officials,  steam-heated  prisons,  hos- 
pital-wards and  numbered  certificates,  certain  to  crystal- 
lize only  finally  in  a  nameless  death  and  a  dissecting-room 
burial. 

The  Law  of  Barter  and  Wages  Affects  all 
Levels  of  Society.  But,  though  this  is  the  worst  of  it, 
it  is  not  the  most  of  it.  All  through  the  laminated  struc- 
ture of  the  body  economic,  in  every  one  of  the  upper 
layers,  this  law  of  action  and  its  inevitable  resultant 
phenomena  find  instance.  No  degree  of  average  indi- 
vidual development  may  protect  a  superior  class  from  its 
presence.  Within  its  ranks,  even  if  it  include  the  ablest 
in  the  land,  is  its  due  proportion  of  the  unemployed — a 


190  THE    COST   OF   COMPETITION 

less  proportion  as  the  higher  levels  are  attained,  but  a 
rigid  one,  never  sinking  to  zero. 

This  ever-present  artificial  repression  of  life  is  the 
cause  and  source  of  the  desperation,  distortion  and 
atavism  into  crime,  insanity  and  suicide  which  is  con- 
stantly appearing  in  all  levels  of  society.  Psychology 
may  explain  its  internal  workings,  heredity  may  pass  it  on 
from  generation  to  generation;  but  It  is  Barter  which 
creates  it. 

The  Repression  of  Genius.  But  with  these  classes, 
however,  the  unemployment  is  never  baldly  visible. 
Rather  is  it  the  better  concealed,  agreeably  to  culti- 
vated habits,  than  in  the  lower  classes.  Nor  does  it 
take  the  form  of  bodily  starvation,  as  with  the  Submerged 
Tenth.  A  worse  form,  according  to  the  standards  of  a 
civilization  nominally  worshiping  art  and  progress,  is 
reserved  to  it:  that  of  the  starvation  of  genius.  For  in 
each  of  us  is  the  spark  which  deserves  that  name.  When 
we  meet  the  acknowledged  representatives  of  the  class, 
the  successful  in  any  of  the  lines  of  creative  art,  we 
modestly  disclaim  any  literary  ability,  any  real  knowl- 
edge of  music,  any  proper  taste  in  pictorial  art,  still  less 
a  skilled  appreciation  of  beauty  in  architecture,  the  first 
of  all  social  arts.  But  down  in  the  heart  within  us  lies 
the  more  or  less  conscious  faith  that  our  words  are  all 
lies,  that  we  know  enough  of  these  things  to  feel  them 
— ^which  is  all,  in  the  best  sense,  that  anyone  knows.  We 
know  that  our  feelings  may  not  have  the  catholic  founda- 
tion or  the  extreme  sensibility  of  the  trained  professional 
perception.  We  usually  know,  or  think,  that  we  lack 
creative  ability.  But  of  the  enjoyment  we  are  certain. 
Of  the  starvation  of  both  we  are  also  certain;  for  as  to 
how  far  we  lack  creative  ability  we  know  with  certainty 
only  that  we  have  never,  most  of  us,  had  a  fair  chance 


DISTRIBUTION  191 

to  find  out.  Our  best  productive  strength,  rewarded  by- 
Barter  with  one-third  of  its  natural  result,  is  all  needed 
to  feed  the  body  and  to  give  the  mechanical  intellect  a 
fair  degree  of  cultivation.  The  much  slower  and  more 
costly  development  of  taste,  perceptivity  and  imagina- 
tion is  crowded  back  and  out — unhappily  not  so  far  but 
that  it  remains  ever  upon  the  visible  horizon,  a  shining 
Carcasonne,  a  feast  of  Tantalus,  to  the  spirit  which  has 
only  partly  learned  resignation  and  which  still  resents 
the  forced  surrender  before  a  tyrannous  gilded  Idol, 
before  an  Institution  not  embodying  Godhead,  before 
that  Krishna  of  Selfishness  styled  the  Competitive  System. 

In  this  sense,  then,  of  being  required  to  concentrate 
one's  best  efforts  upon  the  tasks  which  are  really  of  the 
least  value  to  us  and  to  the  community,  albeit  the  only 
ones  for  which  it  will  award  us  Purchasing-Power,  can  be 
added  this  additional  statement  of  the  Law  of  Enforced 
Idleness : 

That  even  among  those  who  retain  the  privilege  of  em- 
ployment the  economic  coercion  is  toward  the  maximum 
employment  of  their  most  material  parts  and  the  minimum 
employment,  amounting  frequently  to  complete  idleness, 
of  those  portions  of  their  latent  ability  to  which  civilized 
ethics  universally  accords  the  highest  standards  of  value. 

This  law  applies  both  to  questions  of  social  ethics  and 
to  those  of  economics.  It  becomes  of  interest  chiefly  in 
considering  the  ranks  of  the  arts  and  professions,  includ- 
ing the  designer  and  the  inventor,  and  the  sources  of  their 
current  supplies  of  recruits. 

The  Rigidity  of  the  Laws  of  Distribution.  This 
relation  between  the  volumes  of  barter  and  of  enforced 
idleness  is  a  rigid  one.  No  amount  of  ethical  effort  on 
the  part  of  charitable  missions,  the  pulpit  or  the  public 


i9'2  THE    COST    OF    COMPETITION 

press,  except  as  it  may  succeed  in  diminishing  the  volume 
or  the  keenness  of  barter,  can  affect  it  in  the  slightest. 
No  amount  of  altruistic  economic  effort:  no  alms-giving, 
no  employment-bureau,  no  vacant-lot  cultivation,  no 
forced  public  works,  can  possibly  alleviate  the  situation, 
except  as  they  may  incidentally  restrict  barter.  Give  a 
man  money  and  you  temporarily  ease  the  pressure  upon 
his  class;  barter  will  follow  it  up  and  absorb  it  until  the 
pressure  is  the  same  as  before.  Show  him  how  to  live 
upon  eight  cents  a  day,  as  did  kindly  Mr.  Atkinson  of 
Aladdin-oven  fame:  if  his  class  adopts  the  plan  sufficiently 
for  the  Idea  to  accomplish  anything  at  all,  wages  will 
promptly  retreat  to  eight  cents  per  day  In  consequence. 
Pick  a  man  up  out  of  the  ranks  of  the  unemployed  and 
arbitrarily  give  him  a  job :  he  Immediately  absorbs  the 
purchasing-power  which  was  before  keeping  someone  else 
at  work,  and  somewhere  else  some  other  poor  chap  Is  told 
to  "  get  his  time "  In  consequence.  Statistics  will  not 
reveal  these  things,  any  more  than  they  would  the  futility 
of  the  perpetual-motion  hopes  of  a  half-century  ago,  but 
the  law  of  the  conservation  of  energy,  Intelligently 
applied,  makes  them  both  equally  clear. 

For  a  century  or  more  organized  charity  has  struggled 
with  the  problem  of  how  man's  natural  promptings 
toward  sympathetic  assistance  of  his  needy  brother  might 
find  expression  In  the  economic  world.  Mere  paternal 
alms-giving  has  long  ago  proved  Its  futility;  it  pauperizes 
and  demoralizes  the  worse  elements  among  the  poor;  it 
fails  to  satisfy  the  better.  After  generations  of  failure, 
bitter  experience  has  taught  organized  charity  the  one 
big  lesson :  To  cease  giving  alms  and  to  offer  encourage- 
ment and  opportunity  Instead.  The  chief  effort  Is  now 
directed  toward  the  finding  of  employment  for  those  with- 
out It. 


DISTRIBUTION  193 

It  is  not  to  be  said  that  this  effort  is  absolutely  fruit- 
less. A  little  time  is  gained,  at  least.  Any  mechanism 
which  operates  to  increase  the  fluidity  of  labor,  to  pro- 
mote its  circulation  from  the  locality  or  trade  where 
opportunity  is  for  the  moment  restricted  to  others  where 
the  instantaneous  conditions  are  more  favorable,  tem- 
porarily aids  labor  in  its  struggle  with  the  competitive 
classes.  Some  charitable  labor-bureaus  accomplish  some- 
thing in  this  line,  but  most  of  them  do  not.  These  laws 
not  being  widely  understood,  any  employment  which 
removes  the  visible  want  is  utilized  to  occupy  the  unem- 
ployed; so  the  effect  is  temporary  and  local  only.  As  to 
the  permanent  alleviation  of  the  average  conditions  of 
labor,  of  the  average  proportion  of  idleness  in  the  com- 
munity, the  futility  of  artificially  lifting  men  and  women 
from  the  submerged  into  the  employed  level  may  be 
asserted  very  positively.  It  is  absolutely  futile.  To 
attempt  to  drain  the  sea  by  pumping  water  from  it  to  the 
nearest  hilltop  and  pouring  it  out  upon  the  farther  side 
is  no  more  so.  In  fact,  the  competitive  system  almost 
completely  shuts  off  all  hope  of  the  effective  transfer  of 
economic  aid  from  those  who  have  plenty  to  those  who 
are  needy.  The  transfer  of  ethical  strength,  of  hope, 
encouragement  and  education,  is  all  that  is  possible.  This 
and  the  beneficial  ethical  reaction  upon  the  giver  which 
results  from  charitable  effort  constitute  the  sole  gains  to 
the  community  which  may  be  hoped  for  from  it. 

Artificially  Enforced  Degeneration.  The  En- 
forcedly Idle  are  currently  engaged  in  industrial  and 
social  degeneration.  From  the  class  in  which  they  are 
forced  to  be  idle  they  gravitate  finally,  after  a  sufficient 
wearing  away  of  hope  and  self-respect,  into  a  lower  one 
where  they  are  able  to  secure  at  least  the  starvation-wage. 
This  again  proves  that  the  latter  subdivision  tends  to  a 


194  THE    COST    OF    COMPETITION 

maximum.  From  whichever  direction  recruits  enter  a 
class,  from  above  or  from  below,  they  enter  by  the  door 
of  the  Starvation-Wage.  When  they  are  rising  it  means 
Hope,  albeit  coupled,  for  the  time,  with  penury.  WJien 
they  are  going  down  it  means  all  the  bitterness  of  insuffi- 
cient food  eaten  with  shame. 

This  phenomenon  of  enforced  idleness  is  existent  in 
every  economic  class  and  level.  Its  individuals  are 
familiar  in  all  the  walks  of  life.  But  there  is  a  vast  dif- 
ference between  the  submergence  of  a  member  of  one 
of  the  upper  layers  of  society,  having  a  comfortable  layer 
below,  however  unwelcome,  into  which  to  sink,  and  the 
submergence  of  an  unskilled  producer.  For  below  this 
layer  is  nothing  but  chaos :  only  pauperism,  crime,  suicide 
or,  sometimes,  as  a  gift  from  Heaven,  "  natural  "  death. 
This  is  the  only  reason  why  this  subdivision  tends  to  be  a 
minority:  its  stout  resistance  to  slow  and  agonizing,  or 
slow  and  stupefying,  death.  There  is  no  need  for  the 
fashionable  drawing-room  discussion  of  "  natural " 
degeneration.  It  Is  very  doubtful  If  there  be  any  such 
thing,  in  genus  homo  at  least.  There  is  enough,  and 
more,  of  the  artificial  sort  involved  in  this  one  Law  of  the 
Submerged  Tenth  to  answer  all  the  known  questions  and 
to  occupy  for  long  the  Intellects  and  consciences  of  those 
who  are  engaged  in  upholding  the  present  commercial 
system. 


IX 

THE  ECONOMIC  ORGANISM 

ECONOMIC  society  now  becomes  visible  as  a  living 
organism.  Material  capital  constitutes  its  bones 
and  tissue:  the  things  with  the  aid  of  which  (but 
not  upon  which)  It  lives  and  which  need  to  be  supplied 
only  as  they  incidentally  wear  out  and  want  repair. 
Material  Value  in  Exchange  constitutes  its  circulation: 
the  blood  upon  which  it  exists  and  which  must  be  cur- 
rently manufactured  as  fast  as  life  proceeds,  or  death 
ensues. 

Its  Structure. — In  attempting  to  illustrate  this  organ- 
ism diagrammatically,  we  must  be  guided  by  our  past 
analysis.  The  two  main  divisions  of  the  body  economic, 
Production  and  Dissipation,  must  be  demarked  from  each 
other  by  a  horizontal  plane,  with  the  former  below  and 
the  latter  above;  for  It  was  shown  plainly  that  the  latter 
both  holds  the  power  over  and  is  supported  by  the 
former.^ 

Within  Division  I  must  be  created  several  horizontal 
subdivisions,  or  layers,  to  represent  respectively  the  more 
and  the  less  skilled  producers:  the  arts  and  professions  at 
the  top,  the  highly  skilled  artisans  next,  the  ordinarily 
skilled  mechanics  who  have  acquired  a  "  trade "  next 
below,  the  unskilled  laborers  next  to  them,  and,  lowest  of 
all,  the  Submerged  Tenth.  The  diagram  Is  an  economic 
classification  of  activities,   not  of  population;   therefore, 

1  See  Fig.  7,  page   198. 
195 


196  THE    COST   OF   COMPETITION 

since  within  either  division  alone  the  productivity  Is  pro- 
portional to,  although  not  equal  to,  the  income  enjoyed, 
the  various  portions  of  individual  activity  going  to  make 
up  these  respective  layers  are  to  be  classified  therein 
according  to  money-wages  received. 

Within  Division  II  are  also  needed  horizontal  sub- 
divisions. Labor  cannot  produce  without  access  to  and 
exchange  of  valuation  with  both  land  and  capital.  The 
species  of  barter  which  attaches  itself  to  this  sort  of 
exchange  is  capitalism.  But  labor  also  cannot  either  pro- 
duce or  consume  without  access  to  exchange  between  trade 
and  trade.  To  this  sort  of  exchange  attaches  itself  barter 
pure  and  simple.  When  labor  has  produced  value  and  it 
has  been  translated  into  valuation,  the  first  slice  cut  off 
therefrom  in  its  distribution  throughout  the  community 
is  rent  and  interest,  to  lump  these  two  together.  From 
the  remainder  Barter  next  abstracts  all  that  it  can  take 
and  still  leave  to  Production  its  indispensable  life-blood. 
What  is  left  goes  back  to  the  producer  in  another  form  of 
commodities,  now  fit  for  his  own  consumption,  whereas 
what  he  produced  was  not.  Therefore,  of  the  two  layers 
into  which  Dissipation  is  to  be  divided,  the  upper  one, 
farthest  away  from  Production  and  accessible  from  it  only 
through  Capitalism,  must  be  Pure  Barter.  Next  beneath, 
supporting  Barter  and  resting  upon  Production,  must 
come  Capitalism. 

Capitalism  thus  interferes  in  the  exchanges  between 
Labor  and  The  Market  in  two  ways: 

( I )  When  the  Labor-Value  is  transmuted  into  Money, 
for  distribution  throughout  the  community;  that  is,  when 
the  laborer  is  hired.  Capitalism-connected-with-Produc- 
tion  then  uses  its  advantage  in  barter  to  keep  the  price  of 
labor  (which  is  paid  in  Money-valuation)  as  low  as 
possible. 


THE    ECONOMIC    ORGANISM  197 

(2)  When  the  Value  comes  back  again  to  Labor  for 
consumption,  in  support  of  its  life;  that  is,  when  the 
laborer  turns  Consumer  and  purchases  in  the  open  market 
the  goods  which  it  needs  to  consume,  Capitalism-con- 
nected-with-Supply  then  uses  its  advantage  in  barter  to 
keep  the  price  of  commodities  as  high  as  possible.  Both 
sorts  of  capitalism  need  display  in  the  diagram,  this  time 
side  by  side. 

In  further  horizontal  subdivision,  Capitalism  might  be 
distinguished  between  Landlordism,  collecting  Rent,  and 
Capitalism  proper,  collecting  Interest,  respectively. 
Barter  might  be  subdivided  into  wholesale  and  retail 
barter,  respectively.  But  little  gain  in  lucidity  would  be 
attained  by  either  complication  of  the  diagram. 

Such  a  diagram  is  illustrated  in  Figs.  7  and  8.  The 
former  Is  a  vertical  plane  section  across  the  ring  shown  in 
perspective  in  Fig.  8.  Its  further  features  are  to  be 
explained  as  follows: 

Its  Circulation.  Production  Is  divided  into  Its  sev- 
eral specializations,  properly  to  be  called  Trades.  Each 
trade  produces  value  In  only  a  single  form,  relying 
upon  Exchange  to  bring  to  it  all  of  the  other  forms  which 
It  may  need.  Each  trade  possesses  its  portion  of  each  of 
the  horizontal  layers:  Its  submerged  tenth  at  the  bottom, 
its  laborers.  Its  skilled  artisans  or  designers,  Its  capitalism 
and  its  barter.  Therefore  the  partitions  between  the 
several  trades  must  be  vertical  planes. 

Because  the  direct  exchange  of  goods  for  goods  is  now 
no  longer  possible,  the  circulation  of  value  cannot  take 
place  below  the  barter-level.  Therefore  the  vertical  par- 
titions separating  the  trades  must  be  regarded  as  imper- 
vious walls  extending  up  to  the  lower  limit  of  Barter, 
just  above  Capitalism.  There  may  be,  of  course,  a  very 
great  number  of  these  trades.     To  aid  the  eye  they  are 


198  THE    COST    OF   COMPETITION 

collected  into  groups;  but  in  fact  each  vertical  lamina  is 
an  independent  unit,  shut  off  from  its  neighbor  by  a  rigid 
economic  wall.  There  are,  of  course,  many  more  of  them 
than  can  be  depicted  in  the  diagram. 

Each  trade  is  as  a  well,  or  as  a  cell  in  a  honeycomb  laid 
flat:  accessible  for  ingress  or  egress  only  at  the  top,  where 
it  meets  Barter.  To  Barter  it  gives  up  all  value  which 
it  produces;  from  Barter  it  takes  in  whatever  sustenance 
it  may  get.  But  before  either  giving  up  its  product  to 
Barter  for  distribution,  or  purchasing  its  sustenance  from 
Barter,  it  must  pay  its  toll  to  Capitalism,  which  seals  the 
doorway  to  all  exchange  with  the  outside  world  and 
abstracts  its  taxation  from  all  passing  traffic. 

In  the  body  economic,  as  in  all  other  organic  bodies, 
there  is  circulation.  So  essential  is  the  circulation  to  the 
life  that  it  is  often  loosely  said  that  the  circulation  is  the 
life.  In  the  body  economic  this  vital  circulation  is  that 
of  Value  (not  of  Valuation,  nor  of  wealth,  although  each 
atom  or  corpuscle  of  Value  is  always  enwrapped  in  its 
envelope  of  Valuation).  It  consists  of  rotational  or 
cyclical  motion  in  each  of  two  planes: 

( 1 )  The  vertical,  shown  in  Fig.  7 :  going  on  within 
each  trade  or  occupation — within  each  individual,  indeed. 

(2)  The  horizontal,  shown  in  Fig.  8:  from  one  trade 
or  occupation  to  every  other. 

The  vertical  circulation  starts  with  the  production  of 
Value  within  the  lower,  or  productive,  layer.  This  Value 
is  always,  practically  speaking,  in  a  form  wholly  worthless 
to  the  producers  themselves  and  unfit  to  sustain  their  life. 
In  industry  in  its  modern  form  the  shoemaker,  for 
instance,  does  not  and  cannot  wear  the  shoes  he  makes, 
any  more  than  can  the  doctor  swallow  his  own  pills  and 
advice.  Before  any  of  these  commodities  can  serve  to 
sustain  life  they  must  be  transmuted  into  money,  or  sold; 


M 


wotsi^tl 


i<-tfoipnpoJt  T  . 


'  J      uoisi.*»j'T~ 


o 
c 
o 

W 


200  THE    COST   OF   COiM PETITION 

which  process  can  be  accomplished  only  in  contact  with 
Barter.-  But  even  the  money  so  obtained  is  unfit,  of  itself, 
to  support  life;  it  needs  first  to  be  transmuted,  by  pur- 
chase, back  into  commodities  again,  but  this  time  into  the 
commodities  needed  by  the  producers  for  consumption  in 
their  prosecution  of  further  life  and  effort. 

It  is  plain  that  purely  vertical  circulation  alone  could 
bring  back  to  the  producers  only  the  very  commodities 
which  their  particular  Trade  or  Occupation  had  excreted, 
and  could  therefore  accomplish  little  or  nothing  toward 
biological  support.  This  difficulty  is  overcome  by  the 
horizontal  circulation  within  Division  II,  which  takes 
place  in  either  direction.  By  its  means  the  value  of  com- 
modities excreted  by  any  one  trade  or  occupation  is  trans- 
ported to  any  other  which  may  need  their  support. 

Everything  in  Division  II  is  perfectly  fluid.  Value, 
liquidated  into  Money-Valuation,  circulates  freely  within 
the  Barter-zone,  so  far  as  locality  or  ownership  is  con- 
cerned, from  any  one  trade  to  any  other.  Capitalism  does 
not  circulate,  in  the  proper  sense  of  the  term,  that  is,  move 
continuously  in  a  cyclical  path;  but  it  drifts  freely  back 
and  forth,  from  any  one  to  any  other  part  of  the  organism, 
wherever  the  greatest  need  for  it  may  be,  with  almost 
perfect  fluidity.  Therefore,  the  walls  which  separate  the 
trades  and  which  are  impervious  to  all  circulation  of 
Value,  are  not  impervious  to  the  osmose  of  Capitalism. 

To  illustrate  this  circulation  of  Value  the  horizontal 
aspect  of  the  economic  organism  is  shown  as  circular,  or 
annular,  in  Fig  8.  The  arrows  in  the  two  diagrams  show 
the  two  sorts  of  circulation.     Production  maintains  ver- 

2  The  sale  actually  negotiated  is  that  of  the  labor  involved  in  producing 
the  given  commodity.  The  producer  no  longer  sells  the  commodity  he 
produces;  instead,  he  sells  his  labor;  but  the  price  thereof  is  based  directly 
upon  the  amount  of  goods  which  become  available  for  sale  as  the  result 
of  its  efforts  and  the  price  which  they  will  bring  in  the  competitive  market. 


O 


c 
o 
c 
o 
o 

W 


tJO 


THE    ECONOMIC    ORGANISM  201 

tical  circulation  within  each  trade  or  cell  (or  each  indi- 
vidual, it  may  be)  by  absorbing  for  its  sustenance  finished 
commodities  from  The  Market  of  Barter  above,  by  biolog- 
ically transforming  this  material  energy  into  Life,  and 
by  transforming  this  vital  energy  back  into  material 
economic  energy  of  Value,  In  laboriously  producing  and 
excreting  up  into  The  Market  the  finished  commodities 
resultant  from  its  productive  effort.  It  maintains  the 
horizontal  circulation  of  all  commodities  within  the  upper 
layer,  that  of  Exchange  by  Barter,  by  the  excretion  from 
its  own  cell  of  its  own  particular  commodity  only  and  by 
its  absorption  into  itself  of  a  portion  of  the  excretions  of 
all  of  the  others.^ 

3  The  energy-transformations  occurring  continuously  within  each  cell 
of  the  productive  layer,  viz.:  the  consumption  of  material  commodities, 
their  dissolution  into  human  life  and  the  expenditure  of  that  life  in  the 
production  of  new  material  commodities,  is  purely  a  biological,  not  an 
economic,  process.  Toward  the  improvement  of  its  efficiency  is  directed 
all  education  and  discipline  of  an  industrial  sort.  But  to  the  question  of 
the  proportion  of  poverty  prevalent  in  the  community  at  any  time  all  such 
effort,  or  its  resultant  increase  in  individual  productive  efficiency,  is  wholly 
irrelevant.  It  was  shown  (pp.  76,  102)  that  the  emulative  response  of  the 
individual  to  such  effort  tended  to  elevate  all  individuals  at  an  equal  rate 
and  to  keep  them  generally  on  a  plane  of  equality  in  productive  efficiency; 
it  was  shown  on  page  81  that  whatever  that  efficiency  might  be  Barter 
would  leave  to  the  individual  only  enough,  on  the  average,  for  a  starva- 
tion-wage,— that  whatever  progress  the  community  as  a  whole  might 
make,  Barter  would  see  to  it  that  we  had  the  poor  with  us  always.  There- 
fore, it  concerns  us,  in  this  analysis,  to  see  alone  what  becomes  of  the 
produce  excreted  by  these  productive  cells, — which  has  always  had  the 
superficial  appearance  of  being  sufficient  for  the  maintenance  of  society 
in  complete  comfort  were  it  only  properly  distributed, — and  to  abandon 
forever  the  cruel  superstition  to  the  effect  that  the  producers  would  exist 
amid  plenty  if  they  would  only  properly  develop  their  productive  effi- 
ciency. The  writer  is  glad  to  assert,  at  this  juncture,  that  he  believes  this 
efficiency  to  be  always  near  the  three  hundred  per  cent,  mark  in  Division  I, 
each  producer  returning  to  society  all,  and  twice  more,  than  he  receives; 
and  that  it  is  only  in  Division  II,  where  plenty  prevails  and  where  the 
income  is  large  and  the  effective  productivity  nothing,  that  the  biological 
efficiency   (for  the  economic  efficiency  is  zero  or  negative)    falls  far  away. 


202  THE   COST   OF   COMPETITION 

Absorption.  Within  this  horizontal  current  of  Ex- 
change, hke  an  eel  in  a  water-pipe,  lies  Competition,  or 
Barter,  absorbing  sustenance  from  the  current  which 
passes  through  it  and  fattening  upon  what  it  absorbs  until 
its  plethora  too  much  chokes  the  circulation  to  permit 
it  to  accumulate  further  fat.^  What  it  receives  is  Value; 
what  it  allows  to  pass  again  into  the  producers'  hands  is 
Valuation:  true  Value  inflated  to  triple  volume,  a  current 
of  one-third  the  density  of  Value.  So  that  what  Produc- 
tion receives  again  for  its  efforts  is  a  volume  to  every 
outward  appearance  equal  to  its  original  productivity, 
and  stoutly  maintained  by  Capitalism  and  the  Bargainers 
to  be  that  equal,  but  which  is  in  reality  diluted  with  two- 
thirds  water, — diluted  and  burdened  with  two-thirds  cost 
of  competition, — so  that  its  real  life-supporting  power  is 
thin  in  that  proportion. 

Vertical  Competition.  Within  the  limiting  cuticle 
of  this  organism,  or  its  external  limitation  by  natural 
environment,  exists  fluid-pressure  in  every  direction. 
Barter,  waxing  fat,  squeezes  down  upon  Production,  both 
by  its  mere  weight  and  by  its  capillary  activity,  calling 
ever  for  "More,  more!"  Production,  almost  asphyx- 
iated by  difficulty  in  purchase  and  consumption,  at  inflated 
valuations  with  diluted  wages,  squeezes  back  with  what 
pressure  it  can,  striving  still  more  strenuously  to  gain  its 
breath  of  life  and  to  keep  up  the  output.     In  between  lies 

by  various  large  fractions,  from  perfection.  But.  whether  he  be  right  or 
wrong  in  this  affects  not  at  all  the  argument  in  hand,  which  is  that  the 
efficiency  of  distribution  by  the  modern  commercial  system,  of  the  value 
actually  noiv  produced  by  Division  I  and  poured  out  into  the  community 
through  the  hands  of  Division  II,  depends  primarily  upon  the  proportion 
of  Division   II  existent  within   the  community. 

*  This  is  the  process  called,  in  railroad-management,  "  charging  all 
the  traffic  will  bear."  The  same  policy  prevails,  under  other  names,  in 
all  successful  businesses. 


THE    ECONOMIC    ORGANISM  203 

Capitalism,  as  passive  as  a  leech,  as  indifferent  to  pres- 
sure as  a  flounder,  knowing  full  well  that  no  amount  of 
striving,  either  above  or  below,  can  rob  him  of  his  toll. 
The  effort  of  Barter  is  to  keep  down  the  wages  of  labor, 
to  maintain  a  monopoly  of  the  market  and  to  keep  up  the 
prices  of  all  commodities  to  the  Consumer.  There  is  no 
effort  on  the  part  of  Competition  to  keep  down  prices,  as 
is  commonly  supposed.  Its  sole  effort  is  to  make  prices 
seem  low.  The  difference  to  the  consumer  is  as  that 
between  black  and  white,  between  truth  and  a  lie;  such  is 
the  difference  between  Barter's  constant  pretense  of  keep- 
ing down  prices  and  its  actual  fruits.  Indeed,  uncon- 
sciously to  the  barterers,  it  is  the  mere  presence  of  the 
present  enormous  volume  of  competition,  with  the  exces- 
sive cost  of  its  maintenance,  which  explains  two-thirds  of 
the  price  of  the  average  commodity  reaching  the  con- 
sumer. But  even  within  his  own  consciousness  is  the 
knowledge  that,  so  far  as  his  efforts  are  purely  negotia- 
tive,  his  endeavor  is  all  against  the  mental  attitude  of  his 
opponent:  to  make  him  believe  that  he  is  getting  much 
and  giving  little,  and  solely  that  the  opposite  fact,  the 
surplus  of  what  he  gives  over  what  he  gets,  may  be  as 
great  as  possible.  If  he  indignantly  doubt  this,  let  him 
ask  himself,  after  any  successful  negotiation  whatever,  if 
the  result  would  have  been  the  same  had  he  disclosed  to 
the  other  party  every  atom  of  information  which  he  pos- 
sessed as  to  the  true  worth  of  the  goods — what  he  paid  for 
them,  where  he  got  them,  how  much  more  of  them  are 
available,  etc.,  etc. 

No  one  bargainer  may  elevate  prices  appreciably  more 
rapidly  than  do  the  rest,  it  is  true;  but  that  is  the  utmost 
that  can  be  said  in  defense  of  competition,  and  it  is  very  far 
from  saying  that  they  any  or  all  of  them  ever  seek  a  real 
reduction  of  prices,  in  aggregate  or  average.     It  is  impos- 


204  THE   COST   OF   COMPETITION 

sible  to  imagine  a  bargainer  striving  to  keep  down  prices; 
his  sole  means  of  livelihood  is  in  selling  higher,  and  as 
much  higher  as  he  can,  than  he  buys.  Unless  he  suc- 
ceed in  making  his  excess  of  selling-price  over  buying-price 
greater  than  that  of  his  competitors,  he  fails  to  survive. 
This  is  the  primary  fact  of  competition.  And  since  his 
buying-price  rests,  ultimately,  upon  the  soil  and  the 
unskilled  laborer, — positive  and  inelastic  foundations  both, 
— this  means  that  the  ultimate  selling-price  is  constantly 
being  elevated.  Since  the  consumer  naturally  resents  this, 
the  prime  aim  of  intelligent  competition  is  to  acquire  the 
power,  by  combination  and  organization,  to  overcome  or 
disregard  this  resistance.  Whatever  be  the  method  of 
organization  amongst  the  barterers,  under  various  names 
and  of  divers  degrees  of  permanence,  all  the  way  from 
partnerships,  small  firms  and  close  corporations  to  the 
"  trusts  "  and  those  unformulated  conspiracies  such  as  the 
"  coal-clubs,"  the  ultimate  aim  is  ever  to  better  control 
the  market  and  to  exalt  prices. 

It  Is  futile  to  reply  to  this:  "That  Is  not  competition, 
but  the  abolition  of  competition."  It  is  competition,  a 
fiercer  competition  between  bargainer  and  consumer  tak- 
ing the  place  of  a  milder  competition  between  bargainer 
and  bargainer.  But  the  force  of  our  position  does  not 
depend  solely  upon  this  point,  although  it  is  true.  All 
sorts  of  competition  raise  prices.  For  the  sole  reason 
why  any  bargainer  might  ever  be  Imagined  as  lowering 
his  prices  is  to  Increase  his  market;  and  it  Is  axiomatic 
In  business  that  the  most  effective  way  to  Increase  one's 
market  Is  by  advertising,  rather  than  by  lowering  prices. 
But  every  item  of  advertising,  of  commercial  traveling, 
of  catch-trades  of  whatever  description,  inevitably  In- 
creases the  cost  of  the  article  to  the  consumer.  He  is 
the  only  possible  one  to  pay  for  it  all,  from  the  kernel  of 


THE    ECONOMIC    ORGANISM  205 

Value  within  to  the  last  dash  of  scarlet  ink  on  the  fancy 
wrapper  without. 

Nor  is  it  sufficient  to  urge  that  this  advertising  policy 
so  distributes  the  bargainer's  profits  over  a  greater 
number  of  buyers  that  each  pays  less  for  what  he  receives. 
The  facts  deny  it.  If  this  were  so,  the  proportion  of 
buyers  to  sellers  must  be  steadily  on  the  Increase;  the 
volume  of  profits  In  proportion  to  value  handled  must  be 
on  the  decrease.  The  opposite  of  both  Is  true.  It  is  the 
most  phenomenal  and  characteristic  sign  of  the  times  that 
the  proportion  of  buyers  to  sellers  is  steadily  on  the 
decrease,  while  the  volume  both  of  advertising  effort  and 
of  net  profits  going  to  the  bargainers  Is  steadily  upon  the 
increase.  According  to  the  laws  stated  in  the  preceding 
pages:  that  barter  and  advertising  tend  to  exalt  prices 
and  to  decrease  consumption  and  constitute  a  destruction 
of  the  community's  wealth,  these  facts  are  both  consistent 
and  natural.  With  the  popular  idea,  however,  that 
advertising  Increases  the  volume  of  trade  and  that  com- 
petition lowers  prices,  they  are  absurdly  Inconsistent. 

Let  one  but  stop  to  consider  the  fact  that  there  Is  no 
natural  reason  why  anyone  should  ever  desire  to  see  prices 
rise,  nor  any  natural  force  which  would  tend  to  raise  them. 
In  fact,  all  natural  evolution,  with  time,  tends  to  depress 
them.  This  is  now  palpably  true  in  the  productive  field. 
Productive  costs  are,  on  the  average,  not  more  than  one- 
fourth  of  what  they  were  fifty  years  ago;  but  selling- 
prices  are.  Indeed,  they  are  sometimes  higher  than  they 
were  fifty  years  ago.  It  is  solely  the  artificial  and 
unnatural  relations  established  by  the  competitive  system 
ivhich  ever  lead  anyone  to  think  of  raising  prices  at  all, 
for  it  Is  the  competitive  system  alone  which  makes  it  pos- 
sible for  anyone  to  profit  thereby.  Under  natural,  free 
exchange,  the  natural  desire  of  the  producer  Is  ever  to 


2o6  THE    COST   OF   COMPETITION 

lower  the  price  of  his  own  output;  for  that  is  accom- 
plished only  by  increasing  his  production,  and  therefore 
his  consumption.  But  under  barter,  the  higher  the  price 
of  the  commodity  the  greater  the  profit.  This  is  obviously 
true  regarding  each  piece  sold.  But  so  far  Is  it  true  that 
even  when  fewer  pieces  are  sold,  in  consequence  of  the 
higher  prices,  the  net  profit  to  the  seller  is  greater.  This 
is  the  economic  fact  back  of  all  artificial  restriction  of  out- 
put— and  it  is  woefully  prevalent.  The  railroads  "  charge 
all  the  trafl^c  will  bear  " ;  that  is,  quite  conscious  that  they 
are  charging  so  high  that  the  traffic  is  restricted  thereby 
below  the  natural  demand,  their  only  care  is  not  to  restrict 
it  so  narrowly  that  even  the  exalted  profits  earned  per 
passenger  are  thereby  incapacitated  for  resulting  in 
increased  aggregate  profits.  In  other  words,  competition 
puts  every  inducement  before  the  bargainer  to  raise  prices 
and  restrict  the  volume  of  trade;  natural  exchange  offers 
every  inducement  to  the  producer  to  depress  prices  and 
increase  the  volume  of  trade. 

The  Reaction  to  Vertical  Competition  from 
Below.  The  constant  aim  of  Production,  in  this  vertical 
internal  squeeze  originated  by  Barter,  is  to  maintain  its 
purchasing-power.  In  this  its  only  opening  for  effort,  out- 
side of  the  tyrannical  trades-union  strike, — its  sole 
weapon  in  the  war-game  introduced  by  the  Profit-seekers, 
— is  in  increased  productivity.  But  that  is  no  opening 
at  all.  It  avails  not  one  whit  to  satisfy  the  unlimited 
absorptive  power  of  Barter.  Within  the  last  half-cen- 
tury Labor's  productivity  has  multiplied  probably  four- 
fold; yet  Barter  now  absorbs  a  greater  proportion  of  this 
enormous  output  than  it  did  of  the  meager  wealth  of  fifty 
years  ago,  leaving  to  Wages  practically  the  same  actual 
income  of  Value  per  man  that  he  enjoyed  in  those  primi- 
tive days  (see  p.  257).     From  this  Labor  is  learning  its 


THE    ECONOMIC    ORGANISM  207 

obvious  lesson:  to  abandon  this  futile  policy  of  trying  to 
do  more  or  better  work  in  order  to  gain  a  competence,  and 
has  almost  had  sense  enough  to  adopt  the  plain  example 
of  the  only  class  which  ever  does  attain  wealth,  the  bar- 
gaining-class :  to  concentrate  its  efforts  upon  the  attain- 
ment of  a  maximum  price  for  what  it  has  to  sell,  with 
little  or  no  care,  without  knowledge  even,  as  to  whether 
what  it  sells  be  much  or  little,  good  or  bad.  Far  be  it  from 
our  present  purpose  to  inculcate  such  a  lesson  of  evil  for 
evil.  But  when  evil  is  done  for  evil  it  should  not  be  the 
first  doer  who  blames  the  second  for  the  entire  fault — 
although  it  usually  is.  If  it  be  adopted  as  our  national 
policy  to  place  the  uppermost  classes  in  a  position  where 
their  own  profit  must  necessarily  be  their  first  consideration 
and  w^here  what  they  furnish  to  the  individual  consumer 
or  investor  is  the  secondary,  the  blame  cannot  lie  with  less 
favored  classes  if  they  follow  suit. 

The  Passivity  of  Capitalism.  Capitalism  makes 
no  effort.  The  instant  its  capital  comes  out  of  employ- 
ment and  the  capitalist  exerts  himself  to  find  opportunity 
for  reinvestment,  or  a  better  rate  of  interest,  he  ceases 
to  be  a  capitalist  and  becomes  a  bargainer.  It  is  only 
when  his  capital  is  in  use,  earning  interest,  and  he  is  idle, 
that  he  evinces  capitalism. 

Vertical  Competition  Defined.  All  such  vertical 
pressure  between  divisions,  layers  or  classes — including 
that  between  the  Barterer  and  the  Consumer,  although 
in  the  latter  case  the  individual  consumer  may  be  of  the 
same  layer  as  the  individual  barterer  who  is  exerting  the 
pressure  at  the  moment — is  to  be  known  as  vertical 
competition. 

Horizontal  Competition.  The  fluid  pressure  felt 
by  each  layer  also  expresses  Itself  horizontally  throughout 


2o8  THE    COST    OF    COMPETITION 

that  layer,  as  Is  to  be  expected.  Labor  competes  with 
labor  for  the  opportunity  for  employment;  capitalism  com- 
petes with  capitalism  for  the  opportunity  for  investment; 
barter  competes  with  barter  for  the  opportunity  for  pass- 
ing through  its  hands  the  circulating  current  of  Value 
seeking  exchange,  for  the  sake  of  the  toll  absorbed  there- 
from in  the  shape  of  Profit.  All  such  competition  is  to  be 
known  as  horizontal  competition. 

Evolutionary  Tendencies  of  Vertical  and  Hori- 
zontal Competition.  It  is  to  be  noted  here,  in 
passing,  that  the  prime  characteristic  of  contemporary 
economic  evolution  is  the  steady  diminution  of  horizontal 
competition — in  Division  I  by  the  closer  and  closer 
organization  into  trades-unions  competent  to  present  to 
the  pressure  from  above  the  maximum  possible,  even  if  a 
comparatively  unavailing,  defensive  resistance;  in  Divi- 
sion II  by  the  closer  and  closer  amalgamation  of  enter- 
prises of  Barter  into  steadily  larger  units  capable  of  exert- 
ing a  steadily  increasing  aggressive  pressure  against  the 
Consumer.  That  is  to  say,  both  above  and  below,  in  the 
economic  organism,  horizontal  competition  is  being 
abandoned,  as  unprofitable,  in  favor  of  an  ever-keener 
intensity  of  vertical  competition.  Barter  is  learning  to 
keep  its  hands  off  both  from  other  barterers  and  from 
Labor;  for  both  Activities,  organized  and  armed,  can  hit 
back:  the  former  in  a  fight  to  the  finish,  the  latter  in  an 
indecisive,  desultory  annoyance  which  it  were  well  to 
avoid,  if  possible.  Both  can  be  avoided  and  the  end  in 
view  still  retained  if  the  aggression  be  turned  aside  from 
them  and  addressed  to  the  Consumer;  for  he  has  scarcely 
a  thought  of  organizing,  not  to  mention  any  prospect  of 
accomplishing  it,  and  cannot  possibly  hit  back.  Although 
organized  politically  under  the  name  of  the  United  States 
of  America,  in  a  unity  of  purpose  and  an  unselfish  patriot- 


THE    ECONOMIC    ORGANISM  209 

ism  in  aggression  and  defense  which  brooks  no  affront 
from  the  proudest  nations  of  the  earth,  yet  economically 
each  citizen  of  these  same  States  stands,  as  a  Consumer, 
alone,  unorganized,  unprotected  by  his  flag,  under  an 
oppression  from  organized  Barter  which  is  as  shameful  as 
it  is  cruel. ^ 

Parallelism   of   Structure  of  Divisions   I  and  II. 

The  horizontal  competition  between  bargainer  and  bar- 
gainer leads  to  the  establishment  within  his  own  division 
of  the  same  laws  which  have  been  deduced  as  applying  to 
society  as  a  whole,  but  much  modified  in  form  by  their 

^  See  Mr.  Baker's  article  in  the  September  McClure's  (1903)  upon  the 
harmony  existing  in  Chicago  between  the  coal-dealers,  the  teaming-cor- 
porations  and  the  teamsters,  practically  their  employees.  The  former  are 
organized  into  an  "  Association,"  the  latter  into  a  "  Union " ;  the  two 
have  agreed  not  to  make  war  upon  each  other,  but  to  work  together  against 
the  public.  As  the  public  constitutes  the  sole  source  of  income  for  both, 
this  is  plainly  good  common  sense.  To  quote  Mr.  Baker:  "Once  at  war, 
Union  and  Association  have  now  come  together  in  a  close  combination ; 
for  months  Messrs.  Driscoll  and  Young  have  met  day  by  day  in  a  dingy 
Dearborn-Street  office,  have  ruthlessly  crushed  competitors  and  '  scabs,' 
and,  backed  by  their  unions,  have  so  directed  and  regulated  the  entire 
teaming  industry  that  the  public  of  Chicago  pays  from  40  to  100  per  cent, 
more  for  every  sort  of  teaming  than  it  did  two  years  ago." 

The  current  history  of  the  entire  industrial  organization  reveals  the 
same   tendency,   although   not   always  so   strikingly  visible. 

The  article  teems  with  fine  illustrations  of  the  ruthless  extortion  of  com- 
binations formed  against  the  public.  The  chief  complaint  against  it  all 
by  Mr.  Baker,  following  the  majority  of  the  people,  is  that  it  has  replaced 
"  wholesome  "  competition.  How  can  it  be  possible  to  overlook  the  iden- 
tity of  all  of  this  with  competition?  Competition  is  war,  and  successful 
war  means  combination  and  organization  upon  each  side  and  discipline 
within  the  ranks.  Our  prehistoric  ancestors,  knowing  no  more  than  to  use 
stone-axes  for  weapons  and  logs  for  marine  transportation,  knew  that 
much.  So,  of  the  chaotic  strife  and  anarchy  (outside  of  the  perfect  disci- 
pline within  the  unions)  which  Mr.  Baker's  paper  so  graphically  reports 
in  detail,  only  more  and  more,  not  less,  can  be  expected  until  society 
learns  to  condemn  all  competition.  See  the  childish  futility  of  the  efforts 
of  Chicago's  citizens  to  rid  themselves  of  this  nightmare!  Mr.  Baker 
says:   "  Do  not  imagine  that  Chicago  lies  quiet  under  its  yoke.     It  struggles 


2IO  THE    COST    OF    COMPETITION 

peculiar  environment  and  much  mitigated  as  to  their  effect 
upon  the  happiness  of  those  immediately  concerned.  That 
is,  horizontal  competition  within  Barter  leads  to: 

( 1 )  The  growth  of  Barter-cost  to  a  maximum  and  Net 
Profit  to  a  minimum; 

(2)  The  establishment  of  a  Starvation-Wage  for  Bar- 
ter which  must  be  only  slightly  greater  than  the  highest 
income  won  by  skilled  labor  not  of  a  professional 
sort;  (for  into  the  choice  of  a  professional  over  a 
commercial  life  enter  other  considerations  than  mere 
income)  ; 

(3)  A  class  of  Enforcedly  Idle  barterers. 

and  strikes  out,  knowing  that  it  is  hurt,  but  not  knowing  exactly  whom  to 
punish.  Various  actions  for  conspiracy  have  been  instituted  in  the 
courts."  .  .  .  "  As  a  prominent  Chicagoan  put  it  to  me:  'It  is  like 
trying  to  fight  the  circumambient  atmosphere.' "  But  only  because  the 
circumambient  atmosphere  is  supersaturated  with  faith  in  the  institution: 
competition,  which  is  the  origin  and  source  of  the  whole  mass  of  iniquity. 

I  am  frequently  asked  if  the  social  unrest  which  is  now  so  plainly  visible 
upon  every  hand  is  to  lead  to  a  political  revolution.  It  is,  although  not 
to  one  of  organized  bloodshed  by  armed  troops.  If  one  wishes  to  gather 
an  excellent  detailed  panorama  of  the  Reign  of  Terror  which  is  to  be 
passed  through  by  this  peace-loving  land  before  it  comes  out  into  the 
clear  air  after  the  storm,  into  an  atmosphere  purged  of  barter  by  legisla- 
tion as  sharp,  clear  and  forceful  as  lightning,  let  him  but  read  the  chap- 
ters of  recent  history-as-we-are-making-it  currently  appearing  in  the 
magazines,  of  which  this  article  of  Mr.  Baker's  is  the  most  recent  and 
one  of  the  best.  If  this  be  not  revolution,  and  a  tragic  sort,  too,  although 
little  field-surger>'  is  in  evidence,  then   I  know  not  what  revolution  is. 

(This  entire  portion  of  the  manuscript  was  written  in  1903.  The  evi- 
dence which  has  accumulated  and  been  reported  in  the  current  periodicals 
since,  and  it  is  accumulating  very  rapidly,  merely  reinforces  what  is 
quoted  here.  At  the  time  of  the  last  revision  of  the  manuscript  the  team- 
sters' strike,  with  its  accompanying  violence  to  both  participants  and  the 
innocent  bystanders,  is  in  progress.  The  luscious  fruit  of  the  combination 
between  employers  and  employees,  the  "  40  to  100  per  cent."  rise  in  prices 
for  teaming,  has  grown  too  luscious  to  permit  peace — or,  perhaps,  the 
employees  find  themselves  getting  chiefly  core  and  rind.  It  matters  little. 
Temporarily  the  battle  surges  thus;  soon  it  will  surge  back  again.  It  is  a 
battle,  with  all  that  battle  m«ans,  either  way.) 


THE    ECONOMIC    ORGANISM  211 

The  same  Is  true  of  Capitalism.  Its  "  starvation-wage  " 
is  the  lowest  rate  of  Interest  accepted  under  maximum 
security.  Its  "  enforcedly  Idle  "  are  the  capitalists  who 
will  not  accept  this  and  who  turn  barterers  and  seekers 
after  better  Investment,  withdrawing  their  capital  from 
use  Into  Idleness  the  while,  instead.  Thus  It  Is  true  that 
capitalism  competes  with  capitalism.  That  the  process  is 
unprofitable  to  the  capitalist  Is  plain  from  the  fact  that 
the  only  time  that  capitalism  draws  no  Interest  Is  when  It 
Is  wandering  in  the  open  market,  bargaining  for  a  chance 
at  investment.  Here  Is  exemplified  the  universal  law : 
that  wherever  competition  exists  must  also  exist  idleness 
and  loss  of  effectiveness.^  For  capitalism  to  cease  draw- 
ing interest  Is  a  gain  to  the  community,  to  be  sure,  but  It  is 
a  loss  to  the  capitalist;  moreover,  it  Is  better  for  the 
community  for  the  capitalist  to  compete  Idly,  as  a  capitalist, 
than  It  Is  for  him  to  turn  barterer  and  compete  actively — 
better  by  the  amount  of  that  activity,  which  must  be  sup- 
ported from  the  community's  fund  of  Value. 

The  Increase   of   Pressure    with  Depth.     Because 
the  opportunity  offered  by  environment  is  most  restricted 

^  In  July,  1905,  Mr.  James  T.  Hill,  the  prominent  financier,  published  in 
the  New  York  Herald  his  views  upon  this  feature  of  the  situation  in  no 
doubtful  terms.  His  opportunity  for  accurate  observation  no  one  can 
deny,  although  his  suggested  explanations  we  consider  worthless.  He 
thinks  that,  while  we  are  working,  eighty  millions  of  us,  to  develop  the  nat- 
ural resources  of  the  country,  from  a  trade  and  business  point  of  view  "  we 
are  making  a  poor  job  of  it."  "  The  country  is  richer  far  than  England  or 
Germany,"  says  Mr.  Hill,  "  and  yet  the  fruits  of  trading  are  exceedingly 
small  compared  with  what  they  ought  to  be."  The  New  York  Times,  in 
comment  thereon,  says  that  "  it  is  perfectly  true,  as  Mr.  Hill  says,  that 
'  what  is  needed  the  country  over  is  a  great  awakening,  a  sort  of  revival  in 
its  business  methods,  in  domestic  and  foreign  trade.'  We  want  to  rid 
ourselves  of  the  '  hampering  influences.'  But  here  again  we  are  groping 
our  way,  and  although  there  is  light  enough  to  show  the  true  path  there 
are  those  among  us  who  make  it  their  business  to  see  that  the  people's  eyes 
are  bandaged  all  the  time." 


212  THE    COST   OF    COMPETITION 

In  the  lowest  layer  and  is  greatest  at  the  top,  the  horizontal 
pressure  from  internal  competition  will  be  greatest  at  the 
bottom  and  least,  or  nil,  at  the  top.  This  horizontal  com- 
petition is  not  so  easily  visible  in  the  lowest  layer.  Labor 
does  not  spend  the  bulk  of  its  time  In  forcing  Its  competi- 
tion, whether  horizontal  and  internal  or  vertical  and 
against  the  upper  classes,  as  does  Barter;  but  the  com- 
petition Is  there,  keen  and  to  the  death,  none  the  less.  If 
the  competition  be  horizontal.  Its  sole  weapon  is  to  accept 
a  cut  in  wages,  a  lower  grade  of  life,  to  try  a  further 
risk  of  degradation  against  bodily  death — In  short,  to 
turn  "  scab  "  and  accept  existence  at  the  price  of  growth 
and  honor.  If  the  competition  be  vertical,  its  sole  weapon 
Is  the  strike,  to  refuse  existence  at  the  price  of  growth 
and  moral  welfare.  But  the  pressure  from  both  direc- 
tions, from  without  and  within,  is  bitter.  To  resist  them 
both  organizations  alone  can  be  effective.  The  whole 
trades-union  system  is  obviously  organized  more  for  the 
purpose  of  protecting  Labor  from  its  own  suicidal  inter- 
nal competition,  from  its  willingness  to  secure  work  at 
any  price,  than  it  is  for  protection  from  the  oppression 
of  Barter  from  above.  It  prevents  such  economic  suicide 
by  force,  if  necessary,  as  Is  done  by  law  in  all  other  cases 
of  suicide.  Only  thus  is  continuous,  growing  life  for  the 
body  as  a  whole  made  possible.  It  Is  to  be  sweepingly 
and  confidently  asserted  that  there  is  no  case  of  moral  dis- 
sipation, of  complete  or  fractional  bodily  suicide,  now 
condemned  by  law  which  Is  so  essentially  antagonistic  to 
the  stability  and  welfare  of  the  community  as  Is  the  will- 
ingness of  any  man  to  accept  a  reduction  of  a  wage 
already  shamefully  low;  yet  against  It  there  is  no  expres- 
sion of  public  law  nor,  outside  of  the  trades-unions,  of 
current  public  opinion. 

To  proclaim  that  Labor  ought  to  accept  employment  at 


THE    ECONOMIC    ORGANISM  213 

any  terms  which  it  can  obtain  is  to  deprive  it  of  its  last 
rampart  in  its  self-defense  against  the  degenerative  effects 
of  Barter,  is  inviting  a  certain  expansion  of  this  very  lack 
of  employment.  For  to  accept  a  cut  in  wages  in  order 
to  get  a  job  does  not  mean  that  more  men  are  at  work. 
It  means  merely  that  this  man  steps  in  while  another  steps 
out;  while  incidentally  the  wages  of  the  entire  class  have 
been  dropped  by  the  amount  of  the  cut  which  the  one 
accepted.'^  Indeed,  since  this  retreat  of  Labor  has  per- 
mitted Barter  to  expand  by  an  equal  amount,  the  pur- 
chasing-power of  the  entire  community  is  diluted  and 
reduced  to  just  that  degree.  The  "  scab  "  is  an  enemy 
to  the  welfare  of  the  entire  body  politic  as  well  as  to  his 
own  class — as  the  traitor,  seeking  his  own  good  at  the 
expense  of  his  community,  must  ever  be.  For  his  defec- 
tion all  are  much  worse  off  and  no  one  any  better:  a 
situation  which  calls  upon  the  laboring  community  to 
repress  by  force  the  act  which  entails  it,  in  exactly  the 
manner  and  with  the  same  right  as  a  state  represses 
treason. 

Human,  artificial  law  does  not  yet  dimly  recognize 
the  natural  fact  that  Labor  is  a  unit-community,  subject 
to  attack  and  oppression   from  without  and   to  treason 

"^  This,  for  instance,  is  the  economic  explanation  of  the  national  exclusion 
of  the  Chinese.  According  to  all  common  sense,  the  presence  of  any  law- 
abiding  class  of  individuals  who  are  willing  to  work  fourteen  hours  daily 
for  less  money  than  an  American  workman  demands  for  nine  hours,  as 
will  the  Chinaman,  would  seem  to  be  an  economic  gain  to  the  community 
so  obvious  as  to  be  grasped  with  avidity.  But  if  we  add  to  the  naturally 
profitable  presence  of  the  Chinaman  an  artificial  institutional  law  to  the 
effect  that  if  he  accepts  a  dollar  for  fourteen  hours'  work  every  othfr 
laborer  must  accept  an  equally  low  income,  which  is  the  competitive-wage 
law,  then  the  presence  of  a  minority  of  Chinese  serves  to  depress  the  wages 
of  thousands  of  American  workingmen,  to  the  loss  of  the  public  and  the 
gain  of  the  profit-seekers.  The  Chinese  blessing  is  turned  into  a  curse  as 
thoroughly  as  is  any  other  good  thing  which  comes  under  the  baneful 
shadow  of  barter. 


214  THE    COST    OF    COMPETITION 

from  within,  and  rightfully  organizing  and  exerting  force 
in  self-protection  from  both.  It  is  altogether  probable 
that  not  until  barter  ceases  to  exist,  when  the  confines  of 
the  entire  political  community  will  be  found  to  be 
coincident  with  those  of  the  unit-community  of  Labor  and 
the  unit-community  of  Consumers,  with  no  Barter  re- 
served as  a  class  separate  from  and  antagonistic  to  both, 
will  this  fact  be  recognized.  Yet,  nevertheless,  natural 
law  declares  this  to  be  fundamentally  true,  without  wait- 
ing for  human  recognition  of  the  fact,  and  coerces  labor 
unions  into  existence  with  as  little  regard  to  any  conscious 
desire  for  them  on  the  part  of  the  community  as  it  does 
the  militia  or  the  police.  Tt  is  the  simplest  of  predictions 
to  observe  that  if  human  law  does  not  soon  recognize  and 
incorporate  this  basic  natural  fact  within  its  fundamental 
principles,  the  latter  must  inevitably  succumb,  the  victim 
of  their  own  internal  lack  of  natural  life  and  strength.  It 
is  the  pressure  of  the  natural  law  against  the  artificial,  the 
pulsating  life  beating  against  the  dead  wall  of  precedent 
and  shaking  it  to  its  foundations,  which  explains  the  whole 
phenomenon  of  modern  Anarchy,  whether  philosophical 
or  nihilistic,  whether  that  of  the  trades-unions  or  that  of 
the  trusts. 

Horizontal  Competition  within  the  Several  Lay- 
ers of  Society  Compared.  With  Labor  competition, 
whether  wisely  vertical  or  unwisely  horizontal,  is  for 
life  itself.  If  the  chance  to  labor  be  denied  or  lost, 
nothing  remains.  The  scabs  have  a  good  excuse  for  their 
treason:  they  are  drowning  men.  But  the  unionists  have 
a  better  excuse  for  condemning  them:  they  are  grappling 
the  support  from  beneath  their  would-be  rescuers. 

But  with  both  Capitalism  and  Barter,  on  the  other  hand, 
horizontal  competition  means  nothing  so  weighty.  If  the 
competitive  effort  against  one's  peer  in  the  upper  division 


THE    ECONOMIC    ORGANISM  215 

should  fall,  there  is  still  much  left  to  life.  The  capitalist, 
at  the  worst,  can  subsist  upon  his  capitalism  until  he  ceases 
to  be  a  capitalist.  The  hardship  of  that  has  never  yet 
been  demonstrated.  He  will  then  be  no  worse  off  than  is 
the  producer  at  his  best.  Nor  does  society  lose  thereby. 
A  consumption  of  the  capital  itself,  of  the  tools  of  use  to 
man,  would  be  a  distinct  loss  to  the  community.  But  the 
self-consumption  of  capitalism  affects  not  at  all  the  capital 
upon  which  it  is  based.  It  consumes  merely  the  hoard  of 
"  securities,"  of  Money-valuation,  of  legal  control  of 
Value,  which  past  error  has  permitted  the  capitalist  to  ac- 
cumulate at  the  expense  of  the  producer — a  past  wrong 
which  no  restitution  may  ever  remedy  and  which  no  con- 
sumption of  that  hoard  can  ever  make  worse.  It  leaves 
that  capital  whole  and  intact,  and  even  freer  for  the  use 
of  the  community  than  it  was  before. 

Moreover,  if  the  bargainer  fail  in  bargaining  against 
his  fellows,  he  has  lost  at  the  game  which  he  himself  chose. 
He  cannot  complain.  He  may  at  any  time  drop  the  seduc- 
tive game  and  turn  his  energy  into  the  ultimately  more,  if 
immediately  less,  satisfactory  avocation  of  Production;  for 
the  cessation  of  his  bargaining  will  release  an  amount  of 
purchasing-power  which  will  exert  more  than  sufficient 
demand  to  reemploy  his  time  in  productive  effort,  if  he 
really  cares  to  earn  his  salt  in  that  way. 

In  all  of  which  Is  visible  the  truth  of  the  general  state- 
ment that  in  vertical  competition  the  advantage  always 
does  and  must  lie  with  the  upper  layer,  that  of  Barter, 
over  the  lower,  the  Productive  layer. 

The  Actual  Proportions  of  Distribution.  If  Fig. 
7  be  drawn  to  a  scale  true  to  actual  fact,  the  several 
areas  will  measure  the  consumption  of  economic  activity 
in  the  several  directions  indicated  by  their  labels.  In 
other  words,  the  Production-area  measures  the  aggregate 


2i6  THE    COST    OF    COMPETITIOxN 

value  produced,  upon  which  the  entire  organism  depends 
for  its  sustenance.  The  entire  area  measures  the  aggre- 
gate Valuation  of  wealth  distributed.  This  is  the  equiv- 
alent of  the  Value  produced.  Therefore,  the  proportion 
of  the  total  area  to  the  production-area  measures  the  ratio 
of  inflation  involved  in  the  translation  of  Value  into  Valu- 
ation or  wealth,  or  the  Money-scale  prevailing  in  the  com- 
munity at  the  time. 

The  areas  of  the  several  subdivisions  measure  the  por- 
tion of  this  aggregate  wealth  or  purchasing-power  which 
is  allotted  to  each  class  of  activity,  or  the  valuation  of  that 
particular  effort  by  the  community.  The  Value,  or  life- 
support,  which  each  class  receives  is  therefore  measurable 
by  dividing  these  several  areas  by  the  money-scale,  or  the 
density,  so  to  speak,  of  the  valuation-solution  of  value. 
That  is,  the  producing  division,  which  produces  all  value, 
enjoys  the  consumption  of  about  one-third  of  it;  the  bar- 
ter-division (including  capitalism),  which  produces  noth- 
ing, enjoys  about  twice  as  much. 

Activities,    not    Populations,  the  Guide.      But  to 

fully  appreciate  what  this  distribution  means  it  must  be 
remembered  that  the  areas  of  Fig.  7  do  not  measure  popu- 
lations of  Individuals,  but  aggregate  purchasing-power,  or, 
in  other  words,  economic  activity  itt  consumption,  or  at  least 
in  absorption.  Hitherto  we  have  been  careful  to  consider 
only  these  activities,  remembering  that  each  individual 
always  comprises  several  sorts  of  activities  within  his 
daily  life;  also  that  some  individuals  incorporate  much 
more  economic  activity  and  effectiveness  than  do  others. 
Looking  at  these  diagrams  of  the  social  organism,  how- 
ever, it  will  be  clear  that  the  classification  of  activities 
visible  therein  coincides  fairly  closely  with  the  segregation 
of  individuals  into  social  classes  in  actual  life.  The  labor- 
ing class  spends  nearly  all  of  its  time  in  production  and 


THE    ECONOMIC    ORGANISM  217 

scarcely  any  in  competition :  an  occasional  evening  given 
to  trades-union  meetings  or  an  occasional  idle  week  on 
strike  is  all.  A  great  many  capitalists,  particularly  the 
larger  ones,  are  purely  capitalists;  that  is  to  say,  they 
enjoy  their  income  idly.  The  great  majority  of  bar- 
gainers do  nothing  but  negotiate  or  promote.  If  they 
enjoy  income  from  both  invested  capital  and  from  active 
effort  in  commercial  life,  they  are  even  then  only  two  sorts 
of  bargainers  in  one. 

On  the  other  hand,  there  is  quite  a  number  of  individuals 
who  fail  to  fall  wholly  within  any  one  class  of  economic 
society;  at  different  portions  of  each  day's  life  they  occupy, 
in  their  varying  momentary  occupations,  each  of  the 
separate  levels  into  which  we  have  divided  all  economic 
activity.  Such,  for  instance,  are  the  store-keepers  and 
manufacturers  of  moderate  size.  Each  performs  some 
daily  effort  which  is  truly  productive,  usually  in  the  way 
of  superintendence;  each  has  some  capital  invested;  each 
spends  a  part  of  his  time  in  negotiation,  promotion  or 
speculation.  It  is  these  individuals  who  will  find  the 
greatest  difficulty  in  following,  understanding  and  accept- 
ing this  analysis.  Feeling  subconsciously,  as  they  do,  that 
their  entire  life-effort  is  directed  toward  but  a  single  end: 
the  furtherance  of  their  private  business,  they  will  find  it 
almost  impossible  to  comprehend  that,  when  their  day's 
work  is  regarded  from  the  standpoint  of  the  interests  of 
society  as  a  whole,  one  portion  of  their  striving  stands  in 
direct  annihilation  of  the  results  of  another  portion,  that 
one  portion  is  constructive  and  valuable  while  another  is 
destructive  and  reprehensible.     Yet  such  is  the  fact. 

Comparative  Density  of  Population  within  the 
Several  Classes  of  Activity.  If  we  consider,  not- 
withstanding this  blurring  of  the  lines  of  accepted  social 
classification  of  individuals  by  the  superposition  thereon 


2i8  THE    COST    OF    COMPETITION 

of  the  accurate  classification  by  activities,  that  the  two  sorts 
of  classification  are  fairly  identical,  and  if  we  then  consider 
the  population  which  evinces  these  different  classes  of 
activity  as  displayed  in  Fig.  7,  it  appears  that  its  density 
is  not  at  all  the  same  throughout.  This  is  important, 
because  it  is  only  by  dividing  by  its  population  the  total 
purchasing-power  allotted  to  a  given  class  that  its  average 
individual  income  and  level  of  comfort  can  be  known.^ 
For  the  population  is  much  more  congested  in  the  lower 
layers.  Whereas  Production  gets  only  one-third  of  the 
community's  purchasing-power,  it  comprises  some  86  per 
cent,  of  the  total  population.  Competition,  securing  two- 
thirds  of  the  wealth,  comprises  only  the  other  14  per 
cent.  Wherefore,  comparing  the  two  Divisions,  the  aver- 
age individual  income  is  obviously  some  eighteen  times  as 
great  in  Division  II  as  In  Division  I;  which  Is  much  what 
would  be  expected  from  our  general  knowledge  of  the 
actual  comparison  of  individual  incomes,  but  adduced  with 
greater  certainty. 

This  variation  in  density  of  population  in  the  two  Divi- 
sions is  illustrated  In  Fig.  9.  In  it  is  shown,  by  the  black 
disk  in  the  upper  portion,  the  population  devoted  to  the 
activities  of  Division  II,  upon  the  same  scale  as  the  clear 
area  of  "  Production "  measures  the  population  con- 
cerned in  that  class  of  industry.  That  Is,  the  clear  white 
area  plus  the  solid  black  measures  the  total  industrial  popu- 
lation; the  entire  area  of  the  large  circle  measures  the  total 
wealth  consumed  by  that  population,  and  Its  several  sub- 

8  This  is  the  only  method  for  attaining  a  clear  analysis  of  the  social 
situation:  to  analyze  activities  first  and  then  to  consider  population  in  rela- 
tion to  the  different  species  of  activity.  To  divide  arbitrarily  the  mass 
of  individuals  composing  society  into  classes  upon  the  assumption  that 
each  individual  can  be  a  member  of  only  one  class  and  that  the  lines 
which  demarlc  classes  pass  between,  instead  of  through,  individuals,  is  to 
invite   at   the   start  only  confusion,   self-deception   and   failure  of  progress. 


■jl    '^"'.s^^d: 


j^tfOI|9ttpOJ    T 


•  I  •  uoi»1««(I" 


220  THE    COST    OF   COMPETITION 

areas  the  portions  of  that  total  wealth  going  to  the  several 
classes  as  units.  Therefore,  the  shaded  upper  portions 
of  the  large  circle  measure  the  wealth  going  into  economic 
dissipation ;  the  small  black  disc  measures  the  population 
which  dissipates  it — a  very  small  eel  to  consume  all  the 
nutriment  supplied  by  a  current  so  large  in  cross-section  as 
the  entire  shaded  portion,  even  supposing  that  it  is  neces- 
sary to  have  any  barter  at  all,  and  truly  a  heinous  blot  upon 
the  intelligence  of  our  modern  industrial  civilization. 

Barter-Cost.  The  lighter  outer  portion  of  the  disk 
measures  the  population  receiving  the  barter-cost,  with 
which  the  true  barterer,  occupying  the  inner  disk  of  solid 
black,  always  surrounds  himself,  as  a  spider  with  a  web, 
In  order  to  catch  trade.  The  individuals  occupying  this 
outer  zone  enjoy,  of  course,  the  same  average  individual 
income  for  a  given  grade  of  skill  as  do  the  occupants  of 
the  production-layer,  because  they  draw  wages  in  wage- 
competition  with  them.  But  because  the  barter-cost 
people,  consisting  chiefly  of  clerks,  stenographers,  sales- 
men, drummers,  the  printers  and  painters  of  advertise- 
ments, and,  last  but  not  least,  the  civil  lawyers,  include  very 
few  unskilled  laborers,  they  represent  a  somewhat  higher 
average  of  skill,  intelligence  and  education  than  do  the 
producers  in  factories,  and  therefore  average  larger  in- 
comes. Nevertheless,  because  the  average  income  allotted 
to  all  wage-earners  by  Barter  is  so  small,  compared  with 
that  reserved  to  itself,  this  outer  ring  of  earners  of  barter- 
wages,  constituting  some  53  per  cent,  of  the  population  of 
Division  II,  receives  only  4.2  per  cent,  of  the  total  income 
absorbed  by  that  Division  and  measured  by  the  shaded 
areas  of  the  large  circle.  This  leaves  the  remaining  95.8 
per  cent,  of  it  to  be  absorbed  by  the  solid  portion  only  of 
the  black  disk. 


THE    ECONOMIC   ORGANISM  221 

Non-Industrial  Population  an  Additional 
Factor.  It  is  to  be  noted,  finally,  that  the  diagram  refers 
solely  to  the  active  industrial  population.  If  it  be  remem- 
bered that  the  individuals  active  in  the  production-layer 
average  a  much  larger  dependency  upon  each  one  of  them 
for  support,  in  the  form  of  a  non-industrial  household 
population,  than  do  those  of  the  upper  layer,  who  usually 
maintain  quite  small  families,  it  will  be  plain  that,  women, 
children  and  invalids  included,  the  diagram  quite  fails  to 
do  justice  to  the  largeness  of  the  community  fed  by  the 
white  area  and  exaggerates  the  population  to  be  repre- 
sented by  the  black  disk  as  supplied  with  income  by  the 
shaded  areas  of  the  large  circle.^ 

The  Effect  of  Distribution  by  Means  of  Barter 
upon  the  Welfare  of  the    Individual    Producer. 

Further  light  upon  the  economic  conditions  of  the  individ- 
ual may  be  had  from  Fig.  10.  It  shows  the  distribution  of 
Value  by  Barter  to  individuals  of  differing  degrees  of 
natural  productivity.  In  Fig.  10  the  coordinate  axis  01 
measures  individuals  of  the  body  economic  and  the  axis 
OP  their  respective  individual  productivities.  That  is  to 
say,  each  element  of  horizontal  measurement,  mathemati- 
cally called  dl,  would  represent  one  economic  individual, 
the  smallest  item  to  be  considered  sociologically,  the  social 
atom.  If  the  diagram  is  to  apply  to  this  nation  as  the 
community  to  be  represented,  the  abscissa  OK  would  be 
divided  into  some  thirty  millions  of  such  parts,  each  repre- 
senting a  single  worker. 

^  In  order  to  avoid  a  possible  confusion,  it  will  be  repeated  that,  in  the 
sense  that  a  population  is  fed  by  him  who  produces  the  things  consumed, 
the  entire  community  is  fed  by  the  white  area  of  Production  alone.  In  the 
sense  that  a  family,  a  class  or  a  community  is  fed  by  the  current  purchas- 
ing-power which  reaches  it  and  is  distributed  among  its  members,  with- 
out any  thought  as  to  whose  efforts  actually  produced  the  Value  of  that 
purchasing-power,  the  above  statements  are  true. 


252 


THE    COST   OF   COMPETITION 


The  resultant  gradation  of  individuals  according  to 
their  natural  productivity  is  shown  by  the  curve  AG,  the 
ordinate  p  of  which  would  measure  the  productivity  of 
each  individual  respectively.  The  greater  number  of  indi- 
viduals possess  a  small  or  medium  productivity,  while  only 
a  few  attain  to  the  highest  degrees  of  efficiency. 

This  insures  that  the  aggregate  productivity  P  of  any 


L  H  K        I 

Fig.  lo.  The  Fate  of  the  Individual  Producer's  Productivity 

portion  of  the  industrial  community  must  be  measured  by 

an  area,  the  number  of  workers  involved  multiplied  by  the 

industrial  productivity  or  height  of  each  in  average.     That 

is  to  say,  . 

P^fpdl 

Thus,  the  total  area  beneath  the  curve  AG,  or  the  area 
OAGK,  must  measure  the  integrated  productivity  of  the 


THE    ECONOMIC    ORGANISM  223 

entire  community.  It  therefore  must  be  equal  to  the  area 
of  the  entire  circle  of  Fig.  7,  when  measured  in  Valuation, 
or  of  the  white  portion  of  it  when  measured  in  Value. 

Of  the  value  produced  by  each  individual  who  has  found 
employment  one  portion  goes  to  economic  dissipation  and 
the  other  returns  to  him  as  wages  of  purchasing-power. 
The  former  is  divisible  into  rent,  interest,  barter-cost  and 
net  profit.  In  Fig.  10  the  wages-portion  is  measured  by 
the  ordinates  HE,  KF,  etc.  The  portion  dissipated  in 
barter-cost  is  measured  by  the  ordinates  EB,  EC,  etc. 
The  portions  dissipated  in  the  forms  of  rent,  interest  and 
net  profit  are  lumped  together  and  measured  by  the 
ordinates  BD,  CG,  etc.  According  to  this,  HE  represents 
the  starvation-wage  for  the  producer,  EB  the  minimum 
cost  of  barter  with  which  his  produce  can  be  marketed  in 
the  given  prevailing  stage  of  economic  progress,  and  BD 
the  smallest  return,  the  "  starvation-wage,"  for  which  the 
bargainers  will  handle  the  stuff.  Subtracting  the  various 
costs  of  competition,  which  range  upward  from  this  mini- 
mum, from  the  various  degrees  of  productivity,  which 
range  upwards  from  HD,  there  results  the  curve  EF  as 
the  one  revealing  the  wage-earning  capacity  or  purchas- 
ing-power of  the  various  individuals,^" 

10  In  order  to  avoid  possible  misunderstanding,  it  is  pointed  out  that  the 
diagram  reveals,  on  its  horizontal  scale,  only  individuals  of  the  producing 
class.  The  areas  above  EF  measure  quantities  of  barter-activity  per  pro- 
ducer. That  is,  let  the  little  area  EfiH  measure  the  productivity  of,  say,  a 
thousand  producers ;  the  areas  above  it,  between  the  same  ordinates,  would 
measure  the  activity  of  that  unknown  number  of  barterers  which  was  en- 
gaged in  marketing  the  produce  of  these  thousand  producers.  The  area 
DhB  may  be  supposed  to  represent  the  activity  of  a  thousand  negotiators 
and  BeE  that  of  a  thousand  individuals  devoted  to  barter-cost;  from  which 
it  would  appear  that  one  thousand  negotiators  would  employ  about  two 
thousand  assistants  in  handling  the  produce  of  about  three  thousand  pro- 
ducers. The  horizontal  scale  of  the  diagram,  which  is  primarily  designed 
to  be  illustrative  of  relations,  could  not  be  made  sufficiently  correct,  how- 
ever, to  warrant  any  such  deductions  as  to  numerical  proportions  from  it. 


224  THE    COST    OF    COMPETITION 

Any  individual,  In  order  to  find  employment,  must 
evince  sufficient  productivity  to  first  make  good  the  least 
possible  cost  of  competition  (Including  both  barter-cost 
and  net  profit)  over  his  value-produced,  and  still  have 
wages  enough  left  to  support  him  in  that  grade  of  life 
which  will  warrant  steady  effort  at  labor,  rather  than  at  a 
mere  discontented  search  after  something  more  endurable 
even  if  less  honorable.  The  minimum  wage  acceptable, 
the  starvation-wage,  Is  visible  at  EH,  the  minimum  cost 
of  competition  connected  with  Its  receipt  from  circulation, 
all  factors  included,  being  ED.  Therefore  the  least  indi- 
vidual productivity  which  can  find  employment  is  their 
sum,  HD.  All  Individuals  possessing  less  productivity 
than  HD,  or  those  occupying  the  field  between  OA  and 
HD,  must  remain  more  or  less  unemployed. 

Their  graded  degrees  of  productivity  are  shown  by  the 
ordinates  between  HL  and  DN.  From  these  several  pro- 
ductivities, before  any  of  them  can  return  any  income  to 
their  owners,  must  be  deducted  the  minimum  cost  of 
marketing  their  produce,  or  ED.  This  abstraction  results 
in  the  curve  EL,  measuring  their  wage-earning  capacity, 
just  as  EF  does  that  of  the  individuals  possessing  a  greater 
productivity.  But,  all  of  the  ordinates  beneath  EL  being 
less  than  HE,  none  of  these  Individuals  can  receive  even 
the  stravation-wage;  they  are  all  more  or  less  unemployed. 
They  taper  off  into  greater  and  greater  economic  submerg- 
ence Into  want,  toward  the  point  of  complete  Idleness  and 

Each  barterer  employs,  in  actual  fact,  about  six  producers,  instead  of  three. 
The  vertical  scale,  though,  is  as  true  as  possible. 

Nor  is  it  to  be  deduced  from  this  diagram  that  the  barterers  receiving 
the  minimum  return  for  barter,  BD,  are  engaged  in  marketing  literally 
the  produce  of  the  particular  producers  of  minimum  productivity,  HD, 
earning  the  starvation-wage  HE.  Indeed,  the  rule  is  almost  the  opposite; 
that  is,  it  is  the  negotiators  individually  winning  the  greatest  returns  who 
are  engaged  in  handling  the  produce  of  the  lowest  grades  of  labor,  earning 
the  meanest  wages. 


THE    ECONOMIC    ORGANISM  225 

a  zero-wage  at  L,  beyond  which  is  the  hopelessly  Sub- 
merged Tenth. 

This  shows  why  the  curve  ANDG  may  take  its  origin 
above  the  zero-point,  instead  of  in  it.  If  the  diagram  were 
made  to  include  the  sick  and  the  violently  insane,  the  curve 
ANDG  would  have  to  originate  at  O.  But  as  this  is  a 
study  in  economics,  those  individuals  biologically  wanting 
in  all  economic  self-helpfulness  are  excluded.  But  there 
are  plainly  many  individuals  who  are  at  present  counted  as 
of  no  economic  value,  and  therefore  left  without  employ- 
ment, who  in  reality  possess  considerable  productivity — 
quite  enough  to  be  self-supporting  were  they  free  to  pro- 
duce and  exchange  without  being  taxed  for  the  cost  of 
barter.  It  will  be  noted  that  practically  all  of  these  indi- 
viduals between  HD  and  OA  possess  productivities  greater 
than  EH ,  the  present  starvation-wage  for  regularly  em- 
ployed labor.  It  does  not  pay  anyone  to  employ  these 
creatures,  however,  nor  can  they  work  on  their  own  respon- 
sibility and  find  a  market  for  their  produce,  because  of  the 
artificial  depression  of  the  valuation  of  all  they  produce, 
and  the  inflation  of  valuation  of  all  they  buy,  by  the  pres- 
ence and  cost  of  barter.  The  cost  of  getting  their  produce 
through  the  markets  and  back  to  them  in  consumable  goods 
is  too  great  to  leave  them  anything  worth  having.  There- 
fore the  better  of  them  (those  to  the  right  of  L)  potter 
at  odd  jobs  and  succeed  in  turning  up  a  partial  self-support, 
to  the  amount  measured  between  EL  and  HL.  They 
have  no  regular  employment  and  what  they  earn  is  less 
than  the  starvation-wage;  they  partly  subsist  upon  charity 
and  partly  die.  Those  to  the  left  of  L  can  do  nothing 
to  earn  anything.  They  constitute  our  paupers,  tramps, 
prostitutes,  criminals  and  the  feeble-minded. 

But  it  Is  plain  that  if  the  cost  of  competition,  ED,  were 
removed,  the  productivity  of  all  of  these  people  would  be 


226  THE    COST   OF   COMPETITION 

sufficient  to  maintain  themselves,  in  the  great  majority,  in 
a  scale  of  comfort  greater  than  that  now  enjoyed  by  the 
self-respecting  laboring  classes.  This  statement,  in  fact, 
leads  the  mind  to  fall  back  immediately  upon  the  law 
already  established:  that  the  natural  productivity  of  any 
whole  person,  when  undiminished  by  cost  of  barter,  exceeds 
his  natural  tendency  to  consumption.  So  that  for  even 
the  feeble-minded,  asking  very  little  here  below,  their 
natural  productivity  would  suffice  for  comfortable  self- 
support.  Other  care  than  purely  economic  they  would 
of  course  need;  and  the  sick,  the  insane  and  the  inveterately 
criminal  would  also  need  care,  of  both  economic  and  ethical 
sorts.  But  if  barter  were  removed  and  the  true  self-help- 
fulness of  each  were  thus  permitted  to  be  utilized  to  the 
full,  it  would  be  found  that  the  great  majority  of  individ- 
uals who  now  appear  as  burdens  upon  society  possess  a 
productivity  quite  adequate  for  their  self-support. 

Summary,  These  diagrams  complete  our  general  ideas 
as  to  the  present  distribution  of  wealth.  The  bargainers 
get  the  lion's  share,  the  producers  get  what  is  left.  Then, 
of  this  maximum  going  to  the  bargainers  some  individuals 
get  the  most,  others  get  an  average,  many  the  starvation- 
wage  for  that  class;  while  the  unemployed  of  the  bar- 
gainers do  not  get  even  that,  but  drop  slowly  and  reluct- 
antly out  of  business  and  into  production  or  crime. 

Of  the  medium  return  going  to  capitalism,  some  of  the 
latter,  which  takes  risks  and  does  it  skillfully,  gets  the 
most,  the  majority  gets  the  standard  rate  of  interest,  while 
a  last  portion  constitutes  its  *'  enforced  idle,"  and  steadily 
but  slowly  loses  itself  by  absorption  in  current  expenditure 
until  its  owner  ceases  to  be  a  capitalist  and  becomes  wholly 
dependent  upon  his  daily  efforts,  either  as  a  bargainer  or 
as  a  producer,  for  his  livelihood. 


THE    ECONOMIC    ORGANISM  227 

Within  the  layer  of  Production,  which  gets  the  mini- 
mum portion,  skilled  labor,  including  the  professions,  gets 
the  most  of  it,  unskilled  labor  gets  the  next  portion  and 
the  Submerged  Tenth  the  least  of  all.  It  needs  to  be 
jioted  here  that,  whereas  the  ablest  producer  (outside  of 
the  technically  skilled)  is  only  slightly  worse  off  as  to 
income  than  the  poorest  bargainer,  the  poorest  producer 
gets  a  minimum  portion  of  a  minimum  portion:  a  sort  of 
third  trituration  of  the  community's  current  Income;  upon 
which  diluted  diet  he  naturally  slowly  degenerates. 

In  following  this  analysis  it  must  be  remembered 
throughout  that  it  is  ever  fully  recognized  that,  as  society 
is  organized  to-day,  the  great  majority  of  the  individuals 
following  bargaining  methods  are  entirely  unaware  of 
doing  anything  reprehensible  or  destructive  to  the  common 
wealth  or  to  the  character  of  the  community.  They  are 
animated  to  effort  only  by  innate  energy  which  must  come 
out,  and  by  the  most  natural  instinctive  zeal  to  succeed  and 
to  provide  for  their  families.  They  are  guided,  not  by 
careful  analysis  of  the  right  or  wrong  involved  in  their 
each  relation  with  an  ultracomplex  industrial  organiza- 
tion, but  by  a  passive  acceptance  of  institutions  and  opin- 
ions as  they  find  them.  That  the  resultant  effort  should 
take  upon  itself  all  the  destructive  characteristics  of  the 
competitive  system  is  not  because  all  bargainers  are  mali- 
ciously inclined,  or  even  indifferent  to  the  interests  of  the 
community,  but  because  public  opinion  misdirects  and  per- 
verts their  natural  activities  away  from  productive  and 
useful  into  competitive  and  destructive  channels.  More- 
over, the  institution  fastened  upon  us  by  chance,  by  tradi- 
tion, is  further  clinched  home  by  this  same  public  mis- 
apprehension, in  that  it  befogs  and  conceals  the  real  issue 
by  attributing  the  blame  for  the  entire  evil  to  the  moral 
obliquity  of  those  who  are  the  victims,   rather  than  the 


228  THE    COST    OF    COMPETITION 

cause,  of  the  whole  phenomenon,  and  by  excusing,  by  even 
rewarding  and  honoring,  those  who  are  chiefly  the  cause  of 
its  perpetuation. 

Nor  is  it  the  leaders  in  barter  who  are  wholly  to  blame. 
It  is  not  so  much  the  hundreds  who  are  engaged  in  "  cap-. 
turing  "  railroads  or  cornering  wheat  as  it  is  the  millions 
engaged  in  haggling  over  every  ten-cent  retail  transaction, 
who  do  the  bulk  of  the  harm.  But  it  is  as  leaders  of  public 
opinion  and  legislation  that  these  captains  of  barter  are 
chiefly  to  blame;  for  it  is  the  law,  the  unwritten  more  than 
the  written,  within  whose  coils  the  consciences  of  us  all 
struggle  helplessly.  So  vicious  is  this  institution  of  uni- 
versal barter  in  its  nature,  that  whatever  promptings  of 
conscience  as  to  the  propriety  of  his  deeds  the  individual 
captain  of  barter  may  feel,  he  is  helpless  to  alter  them 
except  by  complete  abandonment  of  the  commercial  field. 
If  he  be  too  scrupulous  to  make  exaggerated  profits,  he  will 
soon  be  forced  out  of  business,  or  to  take  a  salaried  posi- 
tion under  a  consolidation,  by  those  more  willing  to  do  so. 
The  competitive  system,  defined  in  a  nutshell,  is  the  arti- 
ficial selection  of  the  most  selfish  for  survival. 

Whatever  may  be  this  blame,  for  the  adoption  or  for  the 
continuance  of  Barter,  it  is  not  the  present  duty  to  discuss 
the  ethics  of  the  situation  further  than  to  point  out  that 
they  are  distinct  from  the  economics.  How  far  this  insti- 
tution of  Barter  may  react  upon  the  ethics  of  the  individual 
and  of  the  community  will  be  discussed  in  Part  II. 
Our  duty  here  is  to  demonstrate  beyond  question  two 
things,  viz. ; 

( I )  The  exact  definition  and  character  of  the  economic 
relations  between  man  and  man  which  are  now  absolutely 
forced  upon  all  of  us,  whether  millionaire  or  miser  or 
minister  of  the  gospel,  by  the  consensus  of  law  and  public 
opinion,  and  their  inevitable  detrimental  effects  upon  the 


THE    ECONOMIC    ORGANISM  229 

material  welfare  of  the  community  and  the  majority  of 
its  individuals; 

(2)  That  this  phenomenon  is  the  result,  not  of  individ- 
ual greed,  however  prominent  that  may  have  become  as 
itself  a  resultant  revelation,  but  of  an  abstract  institution, 
a  mere  intellectual  compact,  alterable  by  argument  and 
agreement  (whereas  avarice  is  not),  to  the  effect  that  the 
only  and  the  best  way  to  determine  the  unknown  price  of 
anything  is  by  duello  of  brain  and  nerve;  for  the  pressure 
upon  the  oppressed  of  the  land  is  not  measured  or  deter- 
mined by  the  quantity  of  greed  on  hand,  but  by  the  quan- 
tity OF  ACTIVITY  EXPENDED  IN  BARTER  AND  IN  BARTER- 
COST.  Whether  that  activity  be  the  result  of  miserly 
avarice,  of  the  gamester's  pleasure  in  accumulating  millions 
which  he  cannot  enjoy,  or  of  the  most  humane  desire  to  sup- 
port wife  or  child  or  aged  parent,  makes  not  one  whit  of 
difference  in  the  economic  result.  It  is  the  evil  of  the 
competitive  system  that  it  forces  activities  originating  In 
motives  as  dissimilar  as  these  to  take  the  same  form  and  to 
produce  the  same  result. 

(3)  That,  in  spite  of  the  common  belief  that  our  laws 
and  polity  of  property  and  business  are  founded  upon  the 
principle  of  conserving  to  each  the  value  which  he  pro- 
duces, as  one  of  the  fundaments  of  justice,  yet  it  is  true  that 
into  the  existent  method  of  distribution  of  wealth  this 
principle  enters  to  only  a  minor  degree.  To  just  what 
degree  it  enters  remains  yet  to  be  seen;  but  that  the  degree 
must  be  a  minor  one  is  evident  from  the  now  demonstrated 
fact  that  the  incorporation  of  this  elementary  and  obvious 
principle  of  mere  justice  cannot  be  complete  until  we  have 
eliminated  from  our  economic  system  all  rent,  all  interest, 
all  commercial  competition  and  all  barter  over  prices, 
whether  of  commodities  or  of  labor,  and  have  permitted 
them   to  be   replaced,   by   natural   gravitational   flow   of 


230  THE    COST    OF    COMPETITION 

supply  and  demand,  with  that  flood  of  emulative  activity 
in  production  which  is  now  dammed  back  Into  potentiality 
by  their  presence. 

This  demonstration  has  now,  with  the  completion  of 
the  analysis  of  Distribution  by  Barter,  become  accom- 
plished— at  least  as  a  skeleton,  as  a  structure  fit  to  stand 
and  to  support  the  life  and  beauty  which  it  itself  lacks. 
To  round  out  this  frame-work  into  a  fit  and  attractive  ex- 
planation of  the  world  of  men  and  affairs,  as  it  appears 
about  us  to-day.  Is  needed  some  study  of  the  way  In  which 
It  happened  to  be,  of  how  this  chance  intellectual  agree- 
ment upon  method,  so  simple,  so  natural  and  so  harmless 
in  its  original  elementary  form,  should  have  grown  into  a 
thing  so  hateful  as  modern  commercial  competition,  that 
gigantic  *'  yellow  "  Institution  which  has  now  come,  like 
dodder  In  a  rose-garden,  to  overrun,  undermine,  half-choke 
and  discolor  to  the  eye  one  of  the  most  wholesome  and 
promising  civilizations  which  the  history  of  man  has  ever 
recorded. 


X 

THE  GROWTH  OF  DISSIPATION 

/4  N  Analogy.  This  entire  proposition :  that  competl- 
/-\  tion,  which  on  the  surface  appears  to  be  effort 
X  -1l  directed  solely  at  the  Increase  of  trade  and  the 
only  medium  whereby  consumers  are  Induced  to  purchasers 
Inherently  and  Inevitably  only  a  dissuader  of  trade,  because 
a  destroyer  of  purchasing-power,  Is  to  the  average  person 
one  sufficiently  novel  and  startling  to  justify  further  effort 
at  Its  clear  understanding.  To  this  end  let  It  be  supposed 
that  a  primitive  community  of  workers,  lacking  communi- 
cation with  other  peoples  and  having  no  other  plan  of  life 
than  the  customs  inherited  from  Its  fathers,  should  have 
adopted  the  national  habit  of  spending  each  forenoon  In 
tilling  the  soil,  herding  cattle,  hunting  game,  etc.,  and  of 
devoting  each  afternoon  to  a  foot-race  for  the  pooled 
results  of  the  day's  productive  efforts,  as  the  only  known 
method  for  apportioning  Its  distribution  throughout  the 
community. 

In  the  first  place,  under  such  a  plan,  the  pool  would 
naturally  be  divided  Into  more  than  one  prize.  There 
would  probably  be  a  first,  a  second  and  a  third  capital 
prize,  for  Instance,  of  graded  value.  Then  would  follow 
a  number  of  consolatlon-prlzes,  awarded  to  all  who  finished 
within  a  certain  time  limit.  But  If  there  is  to  be  a  race  at 
all,  In  any  proper  sense  of  the  term,  It  Is  obviously  essential 
that  there  be  fewer  prizes  than  racers.  That  Is,  If  the 
capital  prizes  are  to  be  appreciably  more  than  an  average 
day's  produce  each,  many  of  the  racers  must  receive 
nothing  at  all. 

231 


232  THE    COST   OF   COMPETITION 

If  the  simile  should  be  brought  home  to  our  present 
national  economic  life,  the  capital  prizes  would  have  to  be 
described  as  being  thousands  of  times  as  valuable  as  the 
produce  of  even  an  exceptional  man.  There  would  be 
millions  of  consolation  prizes,  each  returning  to  its  winner 
so  small  a  fraction  of  the  day's  produce  that  he  would 
only  just  be  fed  into  fitness  for  the  next  day's  race,  and  no 
more.  There  would  be  tens  of  thousands  of  runners  in 
excess  of  the  number  of  prizes. 

In  any  such  a  race  for  wealth,  or  for  competence,  or 
for  bare  life  itself,  it  is  obvious  that  the  average  speed  of 
the  runners  has  nothing  whatever  to  do  with  the  welfare 
of  the  commnnity.  They  may  run,  on  an  average,  four 
miles  or  fourteen  or  forty  to  the  hour:  the  result  is  the 
same.  The  total  amount  of  produce  has  not  changed, 
except  that  more  of  it  is  needed  to  keep  up  the  pace  and 
less  strength  is  left  for  value-production  on  the  morrow. 
The  riches  of  the  commonwealth  have  not  been  altered, 
except  that  they  become  smaller,  in  proportion  to  the 
strenuousness  of  life,  as  competition  becomes  more  keen 
and  skillful.  Only  identity  of  ownership  has  been  settled 
by  the  race;  distribution  of  wealth,  not  production  of 
value,  has  alone  been  accomplished. 

Again,  the  average  speed  of  the  community  of  racers 
has  nothing  to  do  with  the  proportion  of  winners  or  of 
losers.  The  pace  may  become  terrific;  it  may  astonish  the 
outside  world;  yet  the  track  will  reveal  the  same  propor- 
tion of  panting,  distanced  and  discouraged  tail-enders  as 
at  an  earlier  time  of  easier  pace.  In  actual  life  in  this 
country  this  fact  is  prominently  visible.  The  average 
productivity  of  the  individual,  the  aggregate  productivity 
of  the  community,  has  been  enormously  increased,  by  labor- 
saving  invention,  by  elevation  of  the  standards  of  public 
intelligence;  the  average  speed  of  production   is  terrific, 


THE    GROWTH    OF    DISSIPATION  233 

compared  with  anything  yet  recorded  by  history;  yet  the 
mass  of  humanity  is  no  richer  in  happiness  than  under  the 
simpler,  less  productive,  bucolic  life  of  the  early  nineteenth 
century.  The  slums  are  larger  than  ever,  the  prisons  and 
almshouses  are  better  filled.  Behold  progress  and 
poverty  I 

Again,  the  efforts  of  any  one  runner  cannot  possibly 
help  anyone  but  himself.  He  may  lift  himself  from  tenth 
place  to  ninth.  He  wins  more,  but  the  community  is  no 
richer.  Worse  than  that,  he  has  inevitably  displaced  some 
other  runner  from  ninth  place  to  tenth.  No  racer  can  win 
except  at  someone  else's  loss.  For  the  higher  altruistic 
promptings  of  the  human  soul  there  is  absolutely  no  possi- 
bility of  expression  or  survival  in  the  racing  system.  The 
only  method  by  which  gain  can  be  made  not  at  some  other's 
loss  is  by  productive  effort,  by  effort  exerted  upon  Mother 
Earth,  not  that  aimed  at  Brother  Man. 

But  in  our  illustrative  community  such  productive  effort 
is  confined,  by  written  and  by  unwritten  law,  to  the  earlier 
portion  of  the  day,  and  its  results  go  into  a  common  pool. 
It  is  only  the  afternoon's  racing,  not  the  morning's  agricul- 
ture, which  can  bring  home  an  income  to  any  man.  That 
in  this  respect  our  simile  is  quite  in  parallel  with  modern 
industry  Is  clear  if  it  be  remembered  that  each  producer, 
— selling  his  labor  at  a  generally  established  rate  of  wages, 
instead  of  himself  selling  his  product  in  the  actual  market, 
while  the  material  results  of  his  labor  are  literally  mixed 
Indiscriminately  in  with  the  goods  produced  by  his  fellows 
before  sale  takes  place  (the  universal  factory-method), — 
actually  does  cast  his  produce  Into  a  pool  to-day.  What 
he  is  to  get  out  of  it  is  determined  almost  entirely  by  the 
activity  and  skill  of  bargainers  In  distant  cities,  whom  he 
never  even  sees  and  over  whose  actions  he  has  absolutely 
no  control,  while  his  own  productive  zeal  plays  a  quite 


234  THE    COST    OF    COMPETITION 

minor  part  In  the  question.  With  these  mightier  men  he 
is  forced,  by  natural  law,  to  cooperate  in  the  general  task 
of  landing  in  the  consumer's  hands  the  goods  needed  by 
society  for  its  support.  With  them  he  is  also  forced,  by 
custom  and  by  artificial  law,  to  pool  the  issue  as  to  what 
purchasing-power  is  to  return  to  each — just  as  thoroughly 
and  inevitably  as  would  the  lamb  and  the  lion  in  the  same 
den  be  forced  to  pool  the  issue  of  an  encounter,  with  only 
one  dinner  visibly  available  for  the  two  of  them. 

It  is  finally  to  be  noted,  in  connection  with  this  Illustra- 
tion of  the  racers  for  the  community's  pooled  production, 
that  not  all  the  teachings  of  the  moralists,  nor  even  the 
customs  of  centuries,  could  force  such  a  people  to  restrict 
their  racing  to  any  prescribed  hours  of  the  evening  alone, 
when  once  the  legality  of  the  institution  were  admitted  by 
law  and  public  opinion  and  its  marked  superiority  over 
productive  effort  as  a  means  of  acquiring  wealth  and 
power  were  recognized.  Natural  appetite  or  unnatural 
avarice,  wholesome  emulation  or  noisome  ambition, 
whichever  you  please,  would  lead  each  man  of  acumen  and 
ability  to  deliberately  neglect  productive  effort  in  order  to 
save  his  strength  for  the  much  more  profitable  racing.  A 
portion  or  all  of  the  morning  would  be  spent  In  training. 
In  scouting  for  weak  points  in  one's  adversaries,  in  learn- 
ing the  track  or  in  a  thousand  of  the  more  questionable 
means  which  always  accompany  a  race  for  stakes,  whereby 
his  chances  for  winning  might  be  enhanced.  He  might 
see,  or  he  might  not,  that  his  absence  from  the  morning's 
productive  duties  diminished  the  total  wealth  of  the  com- 
munity; if  his  afternoon's  success  brought  him  a  much 
larger  portion  of  the  slightly  diminished  total,  his  essential 
desires  would  be  satisfied,  and  both  Intellect  and  conscience 
would  be  dulled  into  acquiescence. 

It  Is  plain,  too,  that  the  race-track  would  soon  come  to 


THE    GROWTH    OF    DISSIPATION  235 

display  only  the  most  fleet  of  foot  in  the  community. 
Some  there  would  be,  indeed,  even  among  the  poorest 
runners,  who,  because  they  loved  sport,  excitement,  and  the 
spirit  of  gambling,  or  because  they  had  never  been  educated 
to  do  a  day's  work,  would  return  to  the  track  and  race, 
day  after  day,  although  almost  always  losers.  But  the 
majority  of  the  losers  would  soon  sicken  of  the  hopeless 
task  and  of  the  race-track  atmosphere;  they  would  either 
hire  out  their  afternoons  at  productive  labor  to  the  com- 
munity for  what  return  they  could  get,  or  they  would 
devote  that  time  to  work  done  for  the  mere  love  of  it,  to 
music,  art,  literature  or  science,  asking  no  other  return 
than  the  pleasure  of  doing  and  the  sense  of  aiding  humanity 
In  its  real  progress. 

Thus  would  the  lapse  of  time  necessarily  result  In  a 
number  of  things,  viz. : 

(i)  The  expansion  of  the  racing-habit  to  include  all 
of  the  time  and  strength  of  the  best  men  of  the  community, 
leaving  In  the  fields  only  enough  of  productivity  to  produce 
the  necessary  valuable  prizes.  Thus  would  grow  the  re- 
striction of  production  and  the  extension  of  poverty.  The 
relegation  of  all  agriculture,  milling,  weaving,  etc.,  to  the 
squaws  among  the  American  Indians  was  but  a  natural 
Illustration  of  this  process. 

(2)  The  steady  growth  of  keenness  of  racing,  due  to 
the  Increased  number  of  runners,  and  of  the  aggregate 
value  of  the  prizes  In  consequence;  thus  would  grow  the 
Intensity  of  poverty. 

(3)  The  specialization  of  all  of  the  best  talent  In  the 
country  out  of  productive  lines  of  effort  and  Into  racing. 

(4)  The  artificial  breeding  of  racers,  by  the  unusual 
opportunities  for  survival  accorded  to  racers  and  the  un- 
usual obstacles  to  survival  placed  before  ability  so  mark- 
edly productive  In  Its  tendencies  as  to  utterly  refuse  to  race. 


236  THE    COST    OF    COMPETITION 

until  the  community,  or  this  portion  of  it  at  least,  became 
essentially  a  racing  species  of  the  genus  homo. 

(5)  The  gravitation  of  the  racing  itself  into  a  species 
of  trade,  carried  on  by  jockeys  or  runners,  while  the  real 
money  was  made  and  the  power  retained  by  those  who 
merely  wagered  as  to  the  results  or  dealt  in  "  tips  "  for 
the  guidance  of  others. 

(6)  The  control  of  the  entire  community,  in  both  its 
productive  and  its  social  life  as  well  as  in  its  more  formal 
political  organization,  by  race-track  standards  and  consid- 
erations; for  the  racers  would  inevitably  constitute  the 
"  successful  "  class,  the  aristocracy.  All  that  is  weak  and 
superficial  and  mercenary  in  humanity  would  fawn  to  them 
and  to  their  success  and  would  gladly  play  into  their  hands 
for  the  sake  of  a  sycophant's  reward :  flattery,  contempt  and 
abuse.  Laws  would  be  made  and  foreign  policies  framed 
to  protect  and  foster  racing  as  the  one  avocation  of  man- 
kind worthy  of  national  consideration.  Formally  and  in- 
formally, by  written  and  unwritten  law,  the  racers  would 
absolutely  rule  the  community.  The  distribution  of  all 
wealth  above  that  going  to  feed  the  fieldhands  would  lie 
in  their  hands.  The  material  rewards  of  life  would  be 
theirs  to  dispense.  Any  perversion  of  life  into  the  ac- 
complishment of  their  desires  which  could  be  hired  would 
be  at  their  command.  Votes  could  be  baldly  purchased 
when  needed.  In  less  dire  need,  the  public  opinion  which 
scorned  such  methods  as  beneath  it,  and  which  prided  itself 
upon  sterling  independence,  could  be  led  by  the  nose  into 
the  same  noose,  with  a  little  shrewdness,  because  of  its 
childish  subservience  to  the  fashions  and  the  fads  of  the 
powerful  few  and  its  blind  faith  in  racing  for  pooled  pro- 
duce as  an  institution  essential  to  production  itself — with 
which,  however,  it  obviously  has  no  natural  connection. 

The  primary  expression  of  the  power  of  this  figurative 


THE    GROWTH    OF    DISSIPATION  237 

"  turf  "  would  be  the  insistent  demand  for  larger  and 
larger  capital  prizes.  It  would  be  represented  to  the 
people  that  the  race-course  was  growing  tremendously  as 
an  institution  (which  would  be  the  truth)  ;  that  it  could 
not  be  operated  with  a  magnificence  and  luxury  commen- 
surate with  the  nobility  and  Importance  of  said  people  If 
the  capital  prizes  were  not  allowed  to  be  enormous  (which 
would  be  true  if  the  race-track  had  anything  to  do  with 
or  for  the  people,  which  It  did  not)  ;  and  that  unless  these 
prizes  were  rapidly  increased  by  the  people  the  racers 
would  refuse  to  race  at  all  (which  would  be  the  baldest  of 
lies).  For,  in  the  first  place,  the  people  would  be  much 
better  off  with  the  abolition  of  racing  for  their  wealth 
altogether;  In  the  second  place.  If  the  supply  of  million- 
dollar  prizes  were  cut  off,  the  sporty  people  would  still 
jockey  for  the  thousands,  or  the  hundreds,  or  the  stray 
pennies  even,  which  were  permitted  to  be  available  for  that 
purpose.  Not  so  magnificently,  of  course,  nor  so  profit- 
ably; but  as  the  whole  race-track  enterprise  was  a  burden 
upon  the  value-producing  people  and  an  obstacle  to  the 
progress  of  the  entire  community  out  of  the  atmosphere 
of  feudalism  and  the  joust,  that  would  constitute  only  a 
gain.  For  it  is  the  comparative  size  of  these  capital 
prizes  which  alone  determines  the  scale  of  race-track  ex- 
travagance and  of  the  property  of  the  non-racers.  Neither 
the  average  productivity  of  the  producers  nor  the  average 
speed  of  the  racers  has  anything  to  do  with  It;  either  may 
be,  and  Is,  Increasing  Indefinitely  without  any  ameliorative 
effect  whatever,  because  the  capital  prizes  are  simulta- 
neously Increasing  In  greater  comparative  proportion. 

The  Reality.  All  of  this,  and  more,  this  country 
exhibits  to-day,  to  a  degree  surpassing  any  other  nation  on 
earth.  The  above  conditions  are  true  to  life.  It  Is  true 
that  every  producer  Is  actually  forced  at  present  to  consign 


238  THE    COST    OF    COMPETITION 

his  produce  to  a  public  pool.  For  he  must  sell  either  It  or 
his  labor.  Grant  once  that:  that  he  cannot  consume  the 
actual  produce  which  he  himself  digs  from  natural  oppor- 
tunities; that  he  must  convert  It,  In  public  market,  Into  a 
portion  of  circulating  medium  lacking  any  characteristic 
identity  with  his  own  handiwork;  and  that  he  must  effect 
a  second  exchange  of  this  money  for  goods  regarding  the 
price  of  which  he  has  no  possible  thing  to  say — and  the 
whole  proposition  Is  granted.  The  price  which  he  receives 
for  his  labor  is  merely  society's  warehouse-receipt  for  his 
time  put  in,  supposedly  (but  only  supposedly)  the  equiv- 
alent of  the  goods  created  and  stored  there  by  his  effort 
and  to  his  credit.  It  expresses  society's  valuation  of  his 
efforts;  but  there  is  no  natural  relation,  still  less  an  equiv- 
alence, between  that  valuation  and  the  real  value  to 
society  of  what  he  has  done.  His  goods  are  gone  from 
him,  hopelessly.  Irretrievably.  It  were  starvation  to  try 
to  retain  them.  They  will  support  society,  but  they  will 
not  support  him.  To  society  they  possess  value;  but 
society  does  not  return  to  him  value  for  value  received.  It 
gives  him  valuation  instead :  a  warehouse-receipt,  the  value 
of  which  to  him  lies  controllable  in  other  hands — con- 
trollable, at  least,  to  a  depreciation  of  its  natural  value, 
although  never  to  an  increase. 

Grant,  further,  the  proposition  that  any  man  may  buy 
as  cheaply  as  he  is  able  and  may  sell  as  dearly  as  he  can, 
and  it  is  granted  that  he  may  make  this  producer's  pur- 
chasing-power as  little  as  might,  and  might  alone,  per- 
mits him.  By  control  of  the  price  of  goods  In  the  open 
market,  by  barter,  by  pure  race-track  methods,  he  may 
stamp  that  warehouse-receipt,  that  certificate  of  Valuation 
only,  with  what  negotiability  for  real  Value  he  Is  able. 
The  law's  permission  rests  upon  no  other  limitation. 

Grant,  again,  that  no  man  may  sell  his  labor  or  buy  his 


THE    GROWTH    OF    DISSIPATION  239 

supplies  without  meeting  this  might  opposed  to  his,  with- 
out exerting  his  little  own  against  it,  and  it  is  plain  that 
each  producer  must  either  race  or  else  hire  a  substitute: 
for  which  purpose  he  usually  finds  the  much  accursed  walk- 
ing-delegate the  cheapest  and  most  efficient  one  available; 
cheaper,  at  any  rate,  than  the  corporation-lawyer,  whom 
also  he  hires,  indirectly. 

He,  in  actuality,  as  Consumer,  has  only  his  warehouse- 
receipt  to  show  for  his  productive  efforts,  as  certificate  of 
his  laboring  citizenship.  That  receipt  does  not  itself  com- 
mand consumable  commodities;  it  merely  entitles  him  to 
enter  the  race  as  one  of  the  citizens  who  formed  the  pool, 
to  see,  in  the  determination  of  prices  thereby,  what  amount 
of  commodities  his  membership  is  to  command.  If  he 
wins,  his  certificate  is  exchanged  for  a  capital  prize;  it  is 
accorded  an  egregiously  exaggerated,  artificial  valuation. 
He  can  then  present  it  at  the  national  warehouse  and  re- 
ceive, of  the  sort  he  chooses,  incomprehensible  wealth  of 
real  value:  steam-yachts,  automobiles  and  Newport  cot- 
tages. If*  he  loses  in  the  race,  his  warehouse-receipt  be- 
comes almost  worthless;  an  egregiously  diminished,  arti- 
ficial valuation  is  stamped  thereon;  it  is  practically  can- 
celed. He  can  present  it  at  the  warehouse  and  starve 
contentedly  until  next  day  upon  what  it  brings  him,  or  he 
may  tear  it  up  and  go  and  jump  into  the  river;  it  is  all 
one  to  the  racers.  They  are  not  their  brother's  keeper. 
He  had  his  chance  to  race.^ 

1  The  "Free  Social  Contract." — At  the  railway-station  one  morning, 
while  awaiting  the  readiness  of  my  train,  I  found  myself  examining  the 
locomotive  and  pondering  upon  the  "  free  social  contract."  Suppose, 
thought  I,  that  before  we  reach  the  city  it  develops  that  this  locomotive's 
boiler  is  defective  and  bursts,  or  that  some  switch-gear  has  rusted  half 
through  without  repair,  or  that  some  distant  freight-agent  has  permitted 
lumber  or  dynamite  to  be  loaded  improperly.  An  accident  ensues.  We 
are    killed,    maimed    or,    at    least,    lose    property.     Yet    the    railroad    com- 


240  THE    COST    OF    COMPETITION 

To  see  this  process,  in  all  its  bald  atrocity,  deliberately 
adopted  as  the  national  one  by  any  community,  would 
stamp  that  people  as  a  savagely  brutal  one.  The  injustice 
of  the  process  is  too  plain  to  permit  escape  from  that  con- 
clusion. Fortunately  for  one's  respect  for  his  fellowmen, 
in  the  actual  competitive  system  of  the  present  day  the  rela- 
tions are  not  so  visible,  so  naked,  in  their  grossness  as  in 
the  illustrative  racing-community;  they  are  too  intricate. 
Nor  have  they  been  deliberately  designed  and  adopted,  as 
the  illustration  supposes;  they  have  been  blindly  inherited 
from  a  brutal  past.  But  they  are  quite  as  unjust  as  has 
been  described.  Indeed,  they  are  far  more  so.  Words  can- 
not reproduce  the  inequity,  the  cruelty,  the  indifference,^ the 
rapacity  and  the  utterly  heedless  waste  of  even  the  known 
facts  of  the  competitive  system,  when  viewed  In  the  light 
of  clear  analysis.  Who  can  say  what  horrid  truth  would 
be  revealed  by  a  similar  analysis  of  the  unknown  and  un- 
knowable facts?  If  a  purely  biological,  individual  evolu- 
tion had  brought  man,  after  all  these  centuries  of  opportu- 
nity for  moral  growth,  to  the  point  where  a  few  men  were 

pany,  let  us  suppose,  will  refuse  all  responsibility  because,  forsooth,  it  was 
our  business,  as  sane  adults  as  well  as  passengers,  to  see  that  all  of  these 
things  were  right  before  we  engaged  our  passage ! 

Such  a  position  would  manifestly  be  unjust  to  the  point  of  absurdity,  so 
obviously  unjust  that  it  would  not  be  countenanced  by  law.  And 
yet  the  supposed  attitude  of  the  railroad  company  would  not  be  one 
whit  more  absurd  nor  unjust  than  their  very  commonly  taken  position 
that  the  price  paid  for  their  tickets  is  a  free  contract,  to  which 
the  buyer  is  as  free  and  responsible  a  party  as  is  the  seller.  The 
factors  which  go  to  determine  the  selling-price  of  the  ticket  are  no 
less  multitudinous,  intricate,  technical  and  remotely  beyond  the  control 
of  the  buyer  than  are  the  details  of  construction  and  organization 
which  affect  the  safety  of  railroad  travel.  Why,  in  the  name  of  com- 
mon sense,  should  the  law  feel  obliged  to  protect  the  individual  in  his  inno- 
cent helplessness  in  the  face  of  the  lattei  and  not  before  the  former?  To  a 
minor  degree  it  does,  of  course;  but  so  soon  as  it  is  urged  that  ordinary 
justice  demands  that  that  degree  be  made  a  major  one,  action  is  blocked  by 
the  cry  that  the  responsibility  of  individual  initiative  is  being  diluted. 


THE    GROWTH    OF    DISSH^ATION  241 

permitted  to  still  exert,  consciously  and  Intelligently,  such 
immeasurable  cruelty  upon  so  many  of  their  fellowmen, 
all  hope  and  faith  must  be  lost.  The  belief  In  human 
degeneration,  Instead  of  salvation,  with  time  would  be 
inevitable.  But  the  saving  clause  to  our  faith  In  human 
affairs  Is  the  unconsciousness  and  Ignorance  of  the  major- 
ity, and  the  helplessness  of  the  minority  who  alone  seem  to 
feel  and  see  that  something  Is  wrong.  The  bulk  of  the  evil  is 
done  by  the  bulk  of  the  people,  by  simple  everyday  bargain- 
ing. The  keenness  of  pressure  Is  put  on  by  the  few  abler 
bargainers,  It  Is  true,  but  only  because  the  lesser  bargainers 
aid  and  abet  them,  anxious  to  do  the  same  were  they  only 
able.  Neither  big  nor  little  can  stop  until  all  agree  to 
stop.  The  wholesomeness  of  the  chastisement  is  shown  by 
the  fact  that  the  price  of  its  first  alleviation,  after  all  these 
centuries  of  humanity's  refusal  to  believe  that  mankind  is 
really  a  unit,  can  come  only  from  absolute  unity  of  action. 
But  the  agreement  Is  not  yet.  Neither  big  nor  little 
bargainers  yet  see  the  real  cost  of  that  bargaining,  the 
cruel  cost  of  the  universal  agreement  to  disagree  as  to 
price. 

The  Evolution  of  Barter  in  America.  In  order 
to  investigate  the  extent  to  which  these  lines  of  develop- 
ment have  actually  taken  place  within  our  own  country 
during  the  last  half-century,  recourse  has  been  had  to  the 
statistics  of  the  United  States  census,  from  1850  to  1900, 
inclusive. 

In  attempting  to  distinguish  between  productive  and 
competitive  effort  therein  Is  promptly  met  the  difficulty  that 
its  classification  takes  no  cognizance  of  this  distinction 
which  we  wish  especially  to  bring  out,  but  Is  based  Instead 
wholly  upon  distinctions  as  to  individual  avocations.  In 
reducing    this    classification    to    the    only    scientific    one 


242  THE    COST    OF    COMPETITION 

(albeit  one  impracticable  of  adoption  in  census-enumera- 
tion) ,  viz. :  by  nature  of  economic  activity,  a  fairly  free 
method  of  translation  has  to  be  adopted.  For  instance, 
all  "merchants"  divide  their  time  between  productive 
and  competitive  effort,  the  proportion  varying  with  the 
size  of  the  business.  The  same  is  true  of  the  manu- 
facturer. In  such  cases  a  broad  estimate  must  be  made 
of  the  general  proportion  between  the  two  sorts  of  effort 
which  probably  exists  throughout  the  entire  occupation, 
as  an  average.  No  one  of  the  occupations,  in  fact,  exists 
purely  as  labeled  in  the  following  classification.  Those 
classed  as  "  wholly  competitive,"  for  instance,  do  accom- 
plish some  production  of  Value.  Those  classed  as 
"  wholly  productive  "  do  conduct  some  competition.  But 
in  each  case  the  bulk  of  time  and  strength  is  expended 
in  one  of  the  two  sorts  of  effort,  while  only  a  small  por- 
tion goes  to  the  other.  In  such  cases  the  occupation 
is  assigned  bodily  to  one  or  the  other  classification,  the 
inaccuracy  due  to  the  presence  of  the  tithe  of  the  other 
sort  of  effort  in  each  of  them  being  considered  as  mutually 
canceled.  Many  of  the  less  important  occupations,  how- 
ever, are  so  near  the  line  between  two  classes  as  to  make 
decision  as  to  their  destination  difficult.  In  all  such  cases 
the  effort  has  been  to  throw  one  doubtful  case  in  one  direc- 
tion and  another  in  the  other,  that  they  might  balance 
each  other  and  reduce  the  error  to  a  minimum. 

The  list  of  classified  occupations  of  the  United  States 
census  is  therefore  divided,  for  present  purposes,  into 
four  divisions  or  classes.     The  first. 

Class  A  includes  all  occupations  deemed  to  be  wholly 
of  a  competitive  or  bargaining  nature.  This  class  of  occu- 
pations would  practically  disappear  were  barter  done 
away  with. 

Class  B  includes  occupations  both  competitive  and  pro- 


THE    GROWTH    OF    DISSIPATION  243 

ductive  in  their  nature.  This  class  would  be  largely 
diminished  in  numbers  and  quite  altered  in  aspect  were 
bargaining  to  cease. 

Class  C  includes  occupations  which,  while  they  might 
be  wholly  productive  in  their  nature  were  there  no  com- 
petition going  on,  are  at  present  largely  perverted  into 
the  aid  and  comfort  of  barter,  or,  in  other  words,  devoted 
to  Barter-cost.  This  class  of  artisans  would  not  neces- 
sarily decrease  in  numbers  with  the  abolition  of  barter; 
it  might  be  considerably  augmented;  but  the  nature,  direc- 
tion and  value  of  its  efforts  would  be  substantially 
reversed  from  what  they  are  at  present. 

Class  D  includes  those  occupations  which  may  be 
styled  wholly  productive.  It  is  the  class  into  which 
all  the  others  would  be  merged,  as  to  their  economic 
effect  upon  the  commonwealth,  were  all  barter  to  be 
abolished. 

This  classification  runs  as  follows : 

Class  A. — Entirely  Competitive. ' 

Agents  and  collectors; 

Auctioneers; 

Bankers  and  brokers; 

Commercial   travelers; 

Officials  of  banks  and  corporations. 
Class  B. — Chiefly  Competitive,  but  partly  Productive: 

Hucksters  and  peddlers; 

Lawyers ;  - 

Manufacturers  and  officials; 

Merchants  and  dealers; 

"  Other  Persons  "  in  the  Division  of    "  Trade  and  Trans- 
portation "; 

Publishers; 

Theatrical  managers. 

2  The  lawyers  devoted  to  civil  law  belong  in  Class  C;  some  of  them, 
indeed,  in  Class  A.  Those  devoted  to  criminal  law  belong  in  Class  D. 
Because  the  census  draws  no  line  between  the  two  sorts  the  entire  occupa- 
tion was  placed  in  Class  B. 


244  THE    COST    OF    COMPETITION 

Class  C. — Productl've  by  nature,  but  contributive  to  Competition: 

Bookkeepers,  clerks  and  salesmen; 

Draymen,  hackmen  and  teamsters; 

Electroplaters  and  engravers; 

Hotel-keepers; 

Livery-stable  keepers; 

Messengers; 

Newspaper  carriers  and  newsboys; 

Packers  and  shippers; 

Printers; 

Stenographers   and   typewriters; 

Telegraph   and   telephone  operators   and   linemen. 
Class  D. — Entirely  Productive: 

All  of  the  Division  of  "  Agriculture,  Fisheries  and 
Mining  " ; 

All  of  the  Division  of  "  Professional  Service  "  except  law- 
yers and  theatrical  managers; 

All  of  the  Division  of  "  Domestic  and  Personal  Service  " 
except  hotel-keepers; 

All  of  the  Division  of  "  Mechanical  and  Manufacturing 
Industries "  except  electroplaters,  engravers,  printers, 
publishers  and  "  manufacturers  and  officials  "  ; 

Boatmen  and  canalmen;  foremen;  hostlers;  pilots;  porters; 
sailors;  steam  and  street-railway  employees;  undertak- 
ers; weighers. 

As  to  Classes  B  and  C  there  is  room  for  discussion. 
Hucksters  and  peddlers,  for  instance,  in  Class  B,  might 
seem  to  be  almost  purely  devoted  to  bargaining,  but  they 
do  accomplish  some  transportation.  They  are  balanced  by 
the  auctioneers  in  Class  A.  The  lawyers  are  the  most 
difficult  to  classify  fairly.  Those  devoted  to  civil  law, 
which  includes  the  ablest  among  them,  come  under  the 
nature  of  Barter-cost  in  their  activities;  but  it  was  unde- 
sirable to  place  them  in  Class  C  because  it  is  reserved  for 
occupations  "  productive,  but  contributive  to  compe- 
tition," and  the  practice  of  civil  law  cannot  be  considered 
as  in  any  way  productive  of  value.  Had  it  not  been  that 
criminal  law  must  be  included  as  one  of  the  necessary 
productive    occupations,    the    lawyers    would    have    been 


THE    GROWTH    OF    DISSH^ATION  245 

placed  In  Class  A.  As  it  is,  Class  B  puts  their  efforts  In 
the  right  direction  and  to  the  right  amount,  although  it 
is  only  in  a  technical  sense  that  they  "  negotiate." 

Consideration  of  Class  C  brings  out  how  intimately 
the  cost  of  bargaining  has  permeated  every  fiber  of  our 
industrial  body.  It  is  only  upon  careful  consideration 
that  any  connection  between  some  of  the  occupations  of 
Class  C  and  competition  can  be  seen.  Draymen  and 
teamsters,  for  instance,  are  occupied  almost  wholly  with 
transportation;  but  the  bulk  of  It  is  transportation  not 
needed  to  get  the  goods  from  maker  to  consumer,  but 
rendered  necessary  only  by  the  artificial  multiplication  of 
owners  and  warehouses  Intermediary  between  production 
and  consumption  and  the  Interminable  duplication  of 
effort  which  is  one  of  the  characteristic  incidentals  of  the 
profit-seeking  system. 

Nor  Is  this  the  worst  of  it.  In  railroad  transportation, 
for  Instance,  the  economies  are  refined  until  the  cost  is 
measured  in  some  fraction  of  a  cent  per  ton-mile.  But 
when  the  railroad's  work  Is  done  the  goods  are  turned 
over  to  a  system  of  transportation,  by  teaming  over  cob- 
ble-stones, so  crude  in  Its  characteristics  that  the  cost  Is 
measurable  only  in  large  fractions  of  a  dollar  per  ton- 
mile.  It  often  cost  more  to  get  goods  from  the  freight- 
depot  to  the  warehouse  than  It  does  to  carry  them  half- 
Vv^ay  across  the  continent.  The  explanation  is  that  the 
railroads  are  each  organized  and  operated  upon  a 
thoroughly  cooperative  basis,  each  department  and  each 
employee  being  induced  and  required  to  direct  his  efforts 
in  harmony  with  the  others  toward  a  single  object.  He 
is  encouraged  in  every  possible  way  to  enter  into  emula- 
tion with  his  fellows,  but  Is  permitted  to  give  no  atten- 
tion whatever  to  competition  against  them  to  his  own 
private  profit.     To  Illustrate,  the  spectacle  of  the  motive 


246  THE    COST    OF    COMPETITION 

power  and  the  general  ticket  agency  departments  of  a 
railroad  organized  competitively  as  separate  properties, 
each  trying  to  get  every  cent  possible  out  of  the  other,  or 
of  each  machinist  in  the  locomotive-shops  trying  to  secure 
control  of  its  tool-room  in  order  to  tax  every  other 
machinist  as  much  as  possible  for  the  privilege  of  its  use, 
would  be  not  one  whit  more  absurd  than  is  the  present 
inharmonious  strife  in  the  unorganized  teaming  business, 
or  between  the  many  departments  of  the  nation's  general 
industrial  organization  for  the  purpose  of  feeding  and 
clothing  itself:  as  we  shall  plainly  see  it  to  be  some  few 
years  hence. 

Between  the  freight-depot  and  the  warehouse  is  full 
instance  of  this  planlessness  and  strife.  The  streets  are 
partly  owned  by  the  city,  partly  by  street-railway  com- 
panies and  partly  by  gas  and  electric  corporations — for 
the  nominally  complete  ownership  of  the  streets  by  the 
city  becomes,  and  must  ever  become,  an  utter  farce  so 
long  as  the  others  are  permitted  to  use  them  for  profit- 
making  purposes.  The  teams  are  owned  by  individual 
owners  or  small  corporations.  Each  pulls  against  the 
other.  Each  strives  to  get  as  much  money  and  to  give  as 
little  service  as  he  may.  The  result  is  cobble-stones  and 
confusion.  Why  do  not  the  writers  upon  railroad 
economics  consider  the  seven  mills  per  ton-mile  as  well 
enough  to  leave  alone,  while  they  turn  their  light  upon 
the  enormous  wastes  of  competition  visible  in  urban 
transportation? 

Moreover,  even  of  the  more  efficient  railroad  trans- 
portation a  very  large  proportion  is  occasioned  wholly  by 
barter.  The  great  bulk  of  winter  passenger-travel  and  a 
fair  fraction  of  all  freight  trafl^c  is  occasioned  by  barter: 
the  first  in  commercial  traveling,  of  ofl'icials  as  well 
as  salesmen;  the  second  by  the  dismemberment  of  each 


THE    GROWTH    OF    DISSIPATION  247 

task  of  production  between  so  many  separate  lo- 
calities.^ 

The  same  is  true  of  almost  all  of  our  phenomenal 
growth  of  trolley-traffic;  while  the  summer  riding  on 
suburban  lines  is  almost  wholly  for  pleasure,  all  the  rest  of 
it  is  occasioned  almost  solely  by  barter.  The  same  is  true 
of  the  telegraph  and  telephone.  In  fact,  it  is  only  when 
this  entire  proposition  as  to  barter  is  fairly  well  in  mind 
that  a  realization  may  be  had  of  how  completely  its 
recent  growth  has  been  permitted  by  and  subsists  upon 
modern  improvement  and  extension  of  the  facilities  for 
communication  and  transportation.  Indeed,  the  bulk  of 
all  of  these  occupations  might  have  been  assigned  to  Class 
C  without  arousing  any  very  valid  question  as  to  accuracy. 
To  be  conservative,  however,  the  steam,  and  street  rail- 
roads have  been  assigned  to  Class  D,  only  the  telegraph 
and  telephone  service  being  assigned  to  Class  C  to  counter- 
balance; but  the  writer  reserves  doubts  as  to  v/hether  this 
properly  reveals  the  extent  of  competitive  cost. 

As  to  electroplaters,  engravers  and  printers,  the  con- 
fusion and  inefficiency  within  their  ranks  is  not  so  great 
as  in  transportation,  but  the  proportion  of  wasted  result 
of  their  effort  is  greater.  A  glance  over  the  field  is  suffi- 
cient. In  newspapers,  trade-journals  and  magazines  the 
proportion  of  space  and  cost  given  over  to  advertising, 
as  compared  with  that  devoted  to  reading-matter,  is 
enormous,  and  it  is  steadily  on  the  increase.  This  one 
topic,  advertising,  would  make  a  splendid  thesis  upon  the 
growth  of  the  cost  of  competition.     In  book-making,  the 

3  The  subdivision  of  the  task  in  specialization  upon  its  several  parts  is 
one  thing,  an  invaluable  thing;  the  assigning  of  each  of  these  subdivisions 
to  unnecessarily  competing  corporations,  with  their  factories  unnecessarily 
scattered  over  a  score  of  cities  in  a  dozen  States,  when  one  unified  organi- 
zation and  premises  might  suffice  for  all,  is  quite  another  and  an  immeasur- 
ably wasteful  thing. 


248  THE    COST    OF    COMPETITION 

trade-catalogues  and  circulars  stand  In  tremendously  signifi- 
cant proportion  over  against  the  books  proper.  Not  only 
is  the  mass  of  trade-publication  appearing  each  year 
almost  beyond  estimate,  but  its  quality  and  cost  is  of  the 
highest.  Practically  all  of  the  finest  work  done  in  lithog- 
raphy and  photogravure  is  devoted  to  advertising  pur- 
poses. In  addition  to  these  items  of  space-advertising  and 
trade-catalogues  comes  the  entire  array  of  leaflets,  cal- 
endars, posters,  street-car  cards,  circular  letters,  etc. 
The  mails  groan  with  the  weight  of  costly  advertising- 
matter  distributed  daily,  the  great  bulk  of  which  finds  its 
way  promptly  to  the  waste-basket  while  the  remaining 
tithe  accomplishes  a  result  of  no  value  whatever  to  the 
community:  the  attraction  of  A's  purchasing-power  into 
C's  pocket  whereas  otherwise  it  would  have  gone  into  B's. 
A  few  years  ago  this  was  all  done  with  printed  circulars, 
calling  for  one  cent  postage.  To-day  these  are  largely 
replaced  by  sealed  letters,  requiring  twice  the  postage  and 
five  times  the  cost  of  mailing. 

To  the  suggestion  that  advertising  is  necessary  in  order 
to  keep  the  consumer  apprised  as  to  what  is  purchasable 
reply  has  already  been  made  (see  page  172).  Bulletins, 
such  as  the  telegraphic  market-reports  or  the  printed  con- 
sular reports,  written  upon  the  same  plan  and  in  the  same 
impartial  spirit  as  our  book-reviews  and  scientific  bul- 
letins, might  supply  to  the  public  the  most  complete  infor- 
mation as  to  every  novelty  of  value  currently  arising  in 
the  world  of  production,  and  yet  be  of  not  one-fiftieth  of 
the  volume  of  our  current  advertising-matter  or  of  one 
thousandth  of  its  cost.  In  comparison  with  such  methods 
as  these,  how  much  helpful  information  as  to  the  worth 
or  the  unworth  of  goods  purchasable  does  one  get  from 
mailed  circulars  containing  no  accurate  or  reliable  infor- 
mation whatever  as   to   the   goods   advocated,    reiterated 


THE    GROWTH    OF    DISSIPATION  249 

ad  nauseam,  from  the  highly  colored  posters  which 
desecrate  our  public  streets,  from  ubiquitous  and  frantic 
adjurations  to  "  Don't  be  a  goose!  "  or  from  the  most 
costly  announcements  of:  "  W whiskey.   That's  all !  " 

Moreover,  there  are  many  costly  forms  of  advertising 
which  fail  to  be  properly  revealed  in  the  classification 
under  discussion.  The  greater  portion  of  down-town 
illumination,  the  multiplicity  of  electric  signs,  on  side- 
walk and  housetop,  some  of  them  exceedingly  elaborate 
and  costly;  the  desecration  of  cliff  and  field  with  thou- 
sands of  hideous  emblazonments;  the  sandwich-man  and 
the  fake  orientals  who  perambulate  the  streets;  the 
inharmonious  confusion  of  street-signs,  from  the  impu- 
dent intrusion,  in  letters  several  feet  high,  of  the  names 
of  men  you  care  nothing  about  and  whom  you  wish  never 
to  meet,  to  that  architectural  crime,  the  "  yellow  front  "; 
the  voluminous  use  of  the  mails  for  the  transmission  of 
undesired  third-class  matter,  now  being  rapidly  replaced  by 
still  more  costly  appeals  by  first-class  mail;  the  enormous 
distribution  of  unasked,  unused  and  wasted  samples,  cal- 
endars, memorandum-books,  etc.,  etc. — all  of  these  to- 
gether involve  a  huge  current  outlay  of  labor  and  raw 
material,  all  inevitably  destined  to  dissipation  and  irretriev- 
able loss,  the  cost  of  which  appears  not  at  all  in  the  classifi- 
cation of  occupations  adopted.  Wherefore  the  writer 
insists  that  its  revelation  of  the  absolute  amount  of  com- 
petition now  prevalent  in  the  country  is  safely,  even 
deceitfully,  conservative.* 

So  with  the  rest  of  the  list.     Packers  and  shippers,  for 

4  In  another  and  independent  estimate  of  the  amount  of  competition  the 
results  attained,  including  all  sorts  of  barter-cost,  netted  nearly  one-third 
higher  than  the  figures  about  to  be  presented;  and  this  expresses  the 
writer's  personal  opinion  as  to  the  real  truth  in  the  case.  But  as  the  method 
then  used  could  not  be  applied  to  the  censuses  of  the  earlier  decades,  it  is 
of  no  use  in  illustrating  the  growth  of  the  institution.     Moreover,  if  the 


250  THE    COST    OF    COMPETITION 

instance,  devote  the  bulk  of  their  effort  to  conducting  the 
artificially  multiplied  shipments  from  one  profit-maker 
to  another,  or  to  the  needless  ornamentation  of  packages 
to  attract  purchase. 

But  our  object  is  not  so  much  to  obtain  an  absolute 
measure  of  the  amount  of  competition  present  as  it  is  to 
gain  an  idea  as  to  its  comparative  growth.  Whether  any 
of  these  items  of  classification  be  justified  as  accurate  or  not, 
the  essential  points  are  that  the  general  sweep  of  distinc- 
tion is  between  Barter  and  Production,  that  unquestion- 
ably the  bulk  of  the  two  are  separated  by  the  classification 
chosen,  and  that  it  is  applied  impartially  to  the  several 
censuses.  If  the  proportion  of  competitive  effort  within 
the  community  has  increased,  it  will  show  plainly  in  the 
earlier  classes  of  the  list,  and  in  the  comparative  decrease 
of  Class  D.  The  removal  of  any  few  items  from  one 
class  to  another  would  have  a  scarcely  appreciable  effect 
upon  the  resultant  exhibit.  This  test,  indeed,  the  author 
has  applied  repeatedly. 

The  Gravitation  of  Economic  Population.  Upon 
this  fair  basis,  therefore,  of  obtaining  a  comparison 
between  the  several  decades  which  shall  be  accurate  in  an 
absolute  sense  only  so  far  as  may  be,  the  four  classes  are 
assigned  to  Competition  or  Production,  respectively,  upon 
the  following  plan : 

Class  A. — All  competition; 

Class  B. — Three-quarters  competition,  one-quarter 
production; 

Class  C. — ^Three-quarters  to  (aiding  and  abetting) 
competition,  one-quarter  to  production; 

proportion  of  our  total  industrial  organization  absorbed  by  barter  be  no 
more  than  the  figures  following,  or  even  considerably  less,  quite  all  that 
is  necessary  has  been  proven  to  show  the  urgency  of  the  need  for  its 
abolition. 


THE    GROWTH    OF    DISSIPATION  251 

Class  D. — All  production. 

As  the  first  result  of  these  assumptions  is  given  the  fol- 
lowing table  of  percentages  of  total  industrial  population 
devoted  to  competition  over  the  fifty  years: 

1850      i860      1870      1880      1890      1900 
5.7       6.2       7.6       7.5        10. o      1 1 .8 

The  dissipators  are  yet  comparatively  few  in  number, 
but  their  proportion  to  the  whole  has  more  than  doubled 
in  the  fifty  years.  The  mathematical  probability  is  that 
in  1906  they  will  number  14  per  cent,  of  the  industrial 
population,  should  no  change  have  taken  place  meanwhile 
in  law  or  public  policy. 

The  above  applies  to  all  population  contributive  to 
barter.  The  figures  for  the  growth  of  the  population 
devoted  purely  to  barter  alone,  or  Class  A,  are: 

1850    i860    1870    1880    1890    1900 
0.24    0.37    0.44    0.62    1.46     1.68 

Class  A,  in  other  words,  had  grown,  in  1900,  to  just 
seven  times  its  proportions  in  1850.  By  19 10  it  will 
probably  have  grown  to  nearer  ten  times  its  porportions 
of  1850. 

Fig.  1 1  shows  separately  the  comparative  growth  of 
each  of  the  four  classes  in  percentage  of  total  popula- 
tion, taking  that  for  1850  as  unity  in  each  case  respec- 
tively. 

Class  D  is  the  most  nearly  constant,  as  compared  with 
the  others,  but  reveals  a  steady  decline  to  less  than  nine- 
tenths,  in  1900,  of  its  original  proportions  in  1850.  Class 
B  is  nearly  as  constant,  but  shows  a  steady  increase  to 
nearly  70  per  cent,  above  its  original  proportions.     Class 


^5^ 


THE    COST    OF   COMPETITION 


C,  the  esquire  of  Class  A,  although  in  the  nature  of  its 
efforts  it  largely  parallels  Class  D,  experiences  a  still  more 

/A 


6- 


5- 


«- 


a- 


o-^ 


i85o       iS6o       iSro       iS8o       iSoo       ipoo 


Fig.     II.  The     Comparative     Growth     of     the     Four     Classes: 

Population 


phenomenal  growth,  to  nearly  three  times  its  original  pro- 
portions.    That  is,  if  the  progress  of  the  past  half-century 


THE    GROWTH    OF    DISSH'ATION  253 

had  been  merely  that  due  to  the  growth  in  population, 
science  and  invention,  Classes  C  and  D  should  have 
experienced  growth  equally.  The  marked  advance  of 
Class  C  while  D  actually  goes  backward  can  be  explained 
onJy  by  the  fact  that  C  is  contributive  to  a  vastly  growing 
barter  which  in  turn  inevitably  restricts  the  opportunity 
for  the  subsistence  of  Class  D. 

Finally,  Class  A,  the  one  of  all  four  classes  which 
should  reveal  unquestionably  any  growth  which  the  institu- 
tion of  barter  may  have  experienced,  shows  a  growth  to 
nearly  seven  times  its  original  size.^ 

The  Economic  Aristocracy  of  Competitive 
Effort.  These  curves,  however,  measure  only  per- 
centages of  population.  They  take  no  account  of  the  fact 
that  nearly  all  of  the  best  ability  of  the  country  gravitates 
into  the  ranks  of  competition,  while  the  masses  still 
addicted  to  production  average  a  much  lower  grade  of 
individual  productivity.  In  order  to  bring  out  this  point 
the  following  diagrams  are  arranged  to  display  the  aggre- 
gate economic  energy  of  the  several  classes,  considering 
the  comparative  productive  efficiency  of  their  individual 
members,  as  revealed  by  their  comparative  industrial 
valuation.  In  the  case  of  the  most  important  of  these 
diagrams,  Fig.  12,  to  the  competitive  cost  thus  previously 
revealed,  which  included  only  net  profits  and  barter-cost, 
was  added  the  economic  energy  consumed  by  Capitalism, 

^'  The  progress  of  this  class  since  1900,  as  estimated,  is  shown  by  the 
dotted  extension  of  the  curve.  It  is  drawn  in  at  the  angle  which  has  char- 
acterized the  average  rate  of  growth  since  1850.  It  will  be  obvious,  how- 
ever, to  anyone  who  has  observed  the  phenomenal  acceleration  of  all  purely 
commercial  enterprises  since  the  Spanish  war  of  1898,  that  the  rate  of 
growth  during  the  last  five  years  must  have  exceeded  anything  previously 
recorded  during  the  past  half-century.  For  instance,  the  Audit  Company, 
of  New  York,  in  its  "  Trust-companies  of  the  United  States,"  reports  that 
of  all  the  trust-companies  in  existence  on  June  30,  1903,  forty-three  per 
cent,  had  been  organized  since  January  i,  1901. 


254 


THE    COST    OF   COMPETITION 


including  rent,  as  well  as  interest  or  dividends  upon  "  cash, 
loans  and  securities."  ^ 

In  Fig.  12  the  total  height  of  the  diagram  measures, 

i860         18^0        i88o        i8go 


i85o 

too 


igoo 


DISSIPATION. 


PRODUCTION. 


90 

80 

70 
60 
60 

so 
zo 


-t  o 


Fig.   12.  The  Growth  of  Dissipation  and  the  Inefficiency  of  the 
National  Economic  Organism 

upon  a  different  scale  for  each  decade,  the  total  industrial 
activity  then  prevailing,  as  revealed  by  the  total  produc- 

G  The  method  of  arriving  at  an  estimate  of  this  current  volume  of  wealth 
will  not  be  discussed  here.  Several  methods  are  available,  but  each  is  in 
the  nature  of  an  estimate  and  opens  space  for  endless  discussion  as  to  accu- 
racy. The  fact  that  we  have  not  based  our  line  of  argument  upon  statis- 
tical proof  at  all,  but  reserved  statistics  purely  for  the  purposes  of  illustra- 
tion, and  for  that  of  comparative  quantitative  growth  only,  justifies  this 
omission.  It  might  be  said  in  passing,  however,  that  the  two  quite  inde- 
pendent methods  relied  upon  for  these  estimates  checked  each  other  within 
three  per  cent.  For  the  purposes  of  a  comparative  display  of  the  several 
decades  this  is  amply  accurate. 


THE    GROWTH    OF    DISSIPATION  255 

tion  of  wealth.  It  also  measures  at  each  decade  the  total 
Value  produced.  The  curves  of  Fig.  12  show,  by  the  ordl- 
nates  of  the  clear  area,  the  percentages  of  the  total  wealth 
currently  available  for  distribution  throughout  the  entire 
nation  which  have  been  allotted  to  and  expended  by  the 
Producers.  The  ordinates  of  the  darker  portion  above 
the  clear  area  show  the  percentages  drawn  and  consumed, 
hoarded  or  wasted  by  the  Bargainers.  The  area  of  solid 
black  shows  the  portions  of  this  last  which  were  absorbed 
by  the  individuals  unquestionably  devoted  to  economic 
dissipation,  viz.:  Class  A  of  the  occupations,  with  the 
addition  of  all  capitalism.  The  shaded  area  shows  the 
portions  absorbed  in  Barter-cost,  as  revealed  by  the  frac- 
tions of  Classes  B  and  C,  which  have  been  considered  as 
consisting  of  that  sort  of  activity.  The  wealth  actually 
lost  to  the  community  by  dissipation  is  therefore  measured 
by  the  total  darkened  area. 

The  barter-cost  is  separated  from  the  pure  barter  and 
capitalism  for  two  reasons,  viz. : 

(i)    As  additional  aid  in  understanding  the  situation; 

(2)  Because  all  of  the  questions  which  may  arise  as  to 
the  justice  or  accuracy  of  the  classification  of  some  of  the 
occupations  as  competitive,  rather  than  productive,  must 
be  confined  to  Classes  B  and  C.  It  cannot  possibly  be 
questioned  that  Class  A  is  practically  entirely  competitive, 
on  the  one  hand,  and  that  it  fails  to  reveal  all  of  the  com- 
petitive effort  extant  in  the  country,  on  the  other.  It  Is 
therefore  absolutely  certain  that  the  solid  black  area 
reveals  less  than  the  truth  as  to  Economic  Dissipation.  It 
is  the  writer's  firm  opinion  that  even  the  total  dark  area, 
including  that  merely  shaded,  Is  also  less  than  the  truth. 
Granting  the  fullest  benefit  of  the  doubt  to  any  such  ques- 
tions, therefore,  the  true  line  demarking  Production  from 
Dissipation  must  pass  somewhere  within  the  shaded  area. 


256  THE    COST    OF    COMPETITION 

The  showing  of  the  diagram,  that  the  barter-cost  of  the 
nation  has  been  sensibly  constant  for  fifty  years,  cannot  be 
true,  however.  It  is  an  all  too  obvious  historical  fact  that 
it  has  increased.  The  explanation  of  the  inconsistency  of 
the  statistics  with  the  facts  is  simple,  however.  The  show- 
ing of  the  diagram  is  correct;  but  it  measures  only  the 
proportionate  income  of  certain  arbitrary  divisions  of 
society  which  during  recent  years  have  been  so  occupied  as 
to  warrant  their  classification  as  competitive  to  a  certain 
degree.  But  fifty  years  ago  they  were  not  competitive  to 
anything  like  that  degree.  Their  efforts  and  their  pro- 
duct were  the  same  in  nature  as  now,  but  the  destination 
of  that  product  was  totally  different.  Then  it  was  largely 
consumed  by  the  people,  in  the  support  of  life;  now  it  is 
consumed  wholly  by  the  bargainers,  to  the  destruction  of 
life.  Indeed,  it  would  almost  be  justifiable  to  state  that 
the  portion  of  this  shaded  area  which  is  properly  charge- 
able to  competitive  effort  were  a  direct  proportion  of  the 
solid  black  area  of  dissipation.  But  whether  this  be  so  or 
not  signifies  little,  for  the  error  is  in  the  earlier,  not  in  the 
later,  years.  It  is  altogether  likely  that  the  barter-cost 
of  1850  was  much  less  than  the  proportion  displayed  in 
the  diagram.  There  is  little  likelihood  that  that  of  1900 
is  anything  else  than  greater  than  what  is  shown  there. 

Fig.  12  reveals  these  proportions  merely  as  percentages 
of  our  entire  industrial  activity.  It  will  provide  a  more 
realizing  sense  of  what  has  been  actually  taking  place  dur- 
ing these  six  decades  if  the  quantities  of  production  and 
dissipation  be  shown  in  their  absolute  dimensions.  Unfor- 
tunately, this  is  impossible.  Owing  to  all  of  our  records 
being  in  dollars  of  Valuation  we  have  no  accurate  knowl- 
edge of  the  growth  of  Value-production.  It  may  be 
assumed,  however,  that  this  productivity  per  capita  has 
increased  by  ten  per  cent,  between  1850  and  1900,  which 


THE    GROWTH    OF    DISSIPATION 


257 


agrees  well  with  the  general  appearance  of  things;  that 
is  to  say,  the  average  enjoyment  of  life  and  growth  per 
individual  has  increased  at  that  rate.     There  are  many 


1S60     i66o     ;8^o    iS8o    iS^o   i()oo    ipio 

Fig.  12a.     The  Advance  of  Invention,  Science  and  Art,  and 
What  we  get  out  of  it. 

who  doubt  that  it  has  increased  at  all.  If  the  truth  be  a 
higher  figure  than  ten  per  cent.,  however,  the  showing  of 
the  diagram  would  be  even  more  striking.  Drawing  the 
line  PP,  of  Fig.  1 2a,  therefore,  at  the  angle  with  the  hori- 


258  THE    COST    OF    COMPETITION 

zontal  measuring  this  rate,  the  recorded  proportions  of 
barter-cost  and  total  dissipation  appear  as  the  dark  areas 
above  PP.  They  show  the  rapidly  increasing  burden 
under  which  each  producer  maintains  his  subsistence  and 
the  futility  of  scientific  progress  in  the  face  of  barter. 

It  is  a  fact  already  stated,  and  soon  to  be  referred  to 
again  in  connection  with  the  ethical  aspect  of  this  question, 
that  this  parasitical  growth  of  competition  subsists  chiefly 
upon  the  natural  growth  of  the  community  in  potentiality 
for  production.  It  is  a  familiar  fact  that,  in  spite  of  the 
recent  phenomenal  growth  of  the  labor-saving  arts,  the 
ability  of  the  individual  to  subsist  in  ease  has  grown  very 
slowly,  if  at  all.  For  instance,  if  we  gauge  the  growth  of 
material  productivity  by  the  tonnage  of  steel-output,  or  of 
railroad-traffic,  it  does  not  appear  that  the  comfort  of  the 
individual  has  increased  at  a  similar  rate.  It  appears, 
indeed,  that  the  individual  has  been  comfortable  only  when 
the  total  material  productivity  has  grown  very  rapidly — 
so  rapidly  that  barter  was  unable,  for  the  moment,  to 
expand  quickly  enough  to  catch  up  with  it  and  absorb  it 
all.  Thus,  the  volume  of  freight-traffic  has  grown  re- 
cently as  follows:  1890-92,  8%  per  annum;  1892-97, 
1.6%;  1897-1900,  16%;  1900-04,  6*^0.  During  these 
years  the  population  grew  steadily  at  about  2%  per 
annum.  In  other  words,  when  the  technical  arts  grew  fast 
enough  to  expand  our  material  productivity  some  three  or 
four  times  as  fast  as  the  population  expanded,  we  enjoyed 
stationary  comfort.  When  they  grew  only  so  fast  as  the 
population  we  had  hard  times.  It  is  only  when  they  grow, 
temporarily,  some  eight  times  as  fast  that  we  enjoy  pros- 
perity, such  as  it  is.     Fig  1 2a  explains  how  this  happens. 

Class-Evolution  Since  1850.  Should  there  still  be 
the  slightest  doubt  left  in  anyone's  mind  that  the  distinc- 


THE    GROWTH    OF    DISSIPATION 


259 


tion  framed  into  the  definitions  of  the  words  Production 
and  Competition  measures  a  real  and  a  most  marked 
tendency  in  our  recent  and  present  economic  development, 
that  doubt  ought  to  be  finally  settled  by  the  showing  of 
Fig.  13.  That  diagram  displays  the  proportion  existing 
between   Classes  A  and  D  throughout  the  half-century, 


Fig.  13.  The  Growth  of  Activity  of  Class  A  Proportionately  ta 

that  of  Class   D 

Classes  B  and  C  being  rejected  entirely  from  considera- 
tion, for  the  moment,  both  as  being  comparativ^ely  doubt- 
ful in  characteristics  and  as  being  of  minor  importance  (as 
shown  by  Fig  12).  It  will  be  noticed  that  whereas  in 
1850  the  certain  dissipation  shown  by  Class  A  amounted 
to  only  17  per  cent.,  or  practically  one-sixth  of  the  cer- 
tainly productive  effort  shown  by  Class  D,  in  1900  it  had 


26o 


i860     IS60     ISjo      tSSo     iSpo     ipoa 

Fig.  14.  The  Comparative 
Growth  of  the  Four 
Classes:    Income 


OF    COMPETITION 

grown  to  be  183  per  cent,  of  it, 
or  nearly  eleven  times  as  great  in 
comparison  By  1905  it  prom- 
ises to  have  reached  a  relative 
proportion  thirteen  times  as  great 
as  what  it  possessed  in  1850. 

Comparative  Evolution  of 
Purchasing-Power.  Fig.  14 
shows  the  comparative  evolution 
of  the  aggregate  income  for  each 
of  the  four  classes  separately,  the 
original  proportions  of  each  in 
1850  being  taken  as  the  basic  unit 
of  comparison.  While  in  all  of 
them  is  visible  the  depressing  ef- 
fect of  the  Civil  War  In  the 
1 860-1 870  decade,  yet  each 
evinces  a  characteristic  tendency 
which  is  followed  with  practical 
consistency  throughout  the  entire 
half-century.  Classes  B  and  C 
receive  the  most  nearly  constant 
proportion  of  the  national  in- 
come, as  might  be  expected  from 
their  comparatively  neutral  na- 
tures; yet  their  leaning  toward 
competition  preponderates  over 
their  portion  of  productive  effort, 
as  is  shown,  in  connection  with 
the  facts  presented  elsewhere,  by 
their  quite  visible  tendency  to  in- 
crease. By  1900  the  proportion 
going  to  Class  B  had  become 
some   9    per    cent,  greater   than 


THE    GROWTH    OF    DISSIPATION  261 

what  it  was  in  1850;  that  of  Class  C  had  increased  by  27 
per  cent.  Class  D,  on  the  other  hand,  shows  not  a  steady, 
but  a  regularly  increasing,  decrease  in  its  proportion  of  the 
aggregate  income.  During  the  first  thirty  years  after 
1850,  to  choose  a  period  long  enough  to  reach  well  to 
either  side  of  the  Civil  War,  its  loss  averaged  9.6  per  cent, 
per  decade;  during  the  twenty  years  next  following, 
extending  down  to  1900,  its  loss  was  at  the  rate  of  11.6 
per  cent,  per  decade.  By  the  end  of  the  century  It  had 
fallen  to  only  48  per  cent,  of  what  it  was  in  1850. 

When  the  number  of  people  affected  by  this  loss  on  the 
part  of  Class  D  is  considered,  its  significance  as  to  our 
national  welfare  and  happiness  becomes  enormous; 
although  the  diagram,  in  order  to  include  the  record  of 
Class  A,  had  to  be  arranged  upon  a  scale  which  lends  it 
little  emphasis.  The  truth  comes  out,  however,  both  as 
to  the  enormity  and  the  explanation  of  the  loss,  when 
attention  is  turned  to  the  phenomenal  growth  of  the  pro- 
portion of  national  income  allotted  to  Class  A.  By  1870 
it  had  grown  to  over  three  times  its  proportions  for  the 
year  1850.  During  the  thirty  years  intervening  between 
1870  and  1900  it  grew  at  the  average  rate  of  two  hundred 
and  fifty-four  per  cent,  per  decade,  attaining,  by  1900,  a 
size  nearly  eleven  times  as  great  as  what  it  claimed  as  its 
own  in  1850!  ^ 

■^  One  interesting  point  is  brouglit  out  by  the  fluctuations  in  tlie  curves 
at  the  time  of  the  Civil  War.  Fig.  12  reveals  a  marked  increase  in  tlie 
proportion  of  economic  dissipation  in  the  country  at  that  time.  Fig.  14, 
however,  shows  a  smaller  growth  of  Class  A  for  that  decade  than  for  any 
other.  The  explanation  is  that  that  period  witnessed  an  enormous  expan- 
sion of  capitalism,  due  to  war  loans  both  public  and  private.  The  absorp- 
tion of  the  country's  adult  males,  and  especially  of  its  ablest  men,  into  the 
ranks  of  the  army,  however,  placed  a  marked  damper  upon  all  commercial 
development,  promotion  and  negotiation.  It  is  altogether  probable  that  all 
of  the  growth  of  Class  A  visible  in  Fig.  14  for  that  decade  took  place  in 
its  latter  half,  the  first  half  very  possibly  showing  negative  progress. 


262  THE    COST    OF    COMPETITION 

The  Irrelevancy  of  Technical  and  Scientific 
Progress.  It  is  ever  to  be  remembered,  in  considering 
these  diagrams,  that  all  effect  due  to  the  growth  of  either 
population  or  the  arts  has  been  eliminated.  These 
diagrams  exhibit  proportions  only.  That  shown  by  one 
class  can  increase  only  by  the  corresponding  decrease  of 
that  of  some  other  class.^     See  also  page  257. 

Industrial  Inefficiency.  The  most  striking  revela- 
tion in  Fig.  12,  to  the  practical  man,  is  not  one  con- 
cerning individual  injustice,  oppression  of  the  poor  or 
aught  of  that  sort.  It  is  the  astounding  inefficiency  of 
organization  of  the  entire  industrial  and  commercial  body, 
viewed  as  a  unit-device  existing  for  the  purpose  of  supply- 
ing the  Consumer  with  goods.  In  this  display  can  arise 
no  question  whatever  as  to  Individual  efficiency  or  Ineffi- 
ciency, by  the  shifting  of  the  blame  for  it  upon  the 
shoulders  of  the  laborers.  Their  productivity  has  undoubt- 
edly markedly  Increased  during  the  half-century,  by 
the  general  rise  In  standards  of  public  education;  yet  the 
diagram  shows  a  steadily  and  rapidly  decreasing  propor- 
tion of  the  aggregate  production  of  wealth  returning  to 
them.  Nor  can  there  arise  any  question  based  upon  the 
recent  growth  in  the  arts  and  sciences.  In  modern 
machines  and  methods.  They  certainly  have  also  Increased 
in  productivity,  with  even  less  doubt.  But  both  of  these 
factors  are  eliminated  by  the  adoption  of  percentages  of 

s  It  is  proper  to  remind  the  reader  that  these  diagrams  are  based  not 
only  upon  the  statistics  of  population  to  be  found  in  the  census-reports,  but 
also  upon  their  modification  by  the  varying  average  incomes  for  different 
classes  and  times.  There  is  no  question  more  the  subject  of  vehement  dis- 
cussion and  difference  of  opinion  than  this  last.  Therefore  the  author 
deems  it  best  to  say  merely  that  he  has  used  figures  which  he  believes  to 
be  correct  in  their  representation  of  actual  conditions.  The  important  point 
to  be  noted  is  that  the  widest  differences  of  opinion  upon  this  point  would 
not  materially  alter  the  conclusions  to  be  drawn  from  the  diagrams. 


THE    GROWTH    OF    DISSIPATION  263 

total  actual  production  as  the  thing  exhibited.  The  aggre- 
gate production  at  each  date,  whether  it  be  greater  or  less 
than  at  earlier  periods,  has  been  considered  as  the  unit- 
base  upon  which  to  build  all  comparisons  and  has  been 
called  "  100  "  upon  the  vertical  scale  of  wealth-distributed 
in  Fig.  1 2.  Looking  at  the  total  industrial  and  commercial 
organization  as  an  apparatus,  not  for  the  production,  but 
for  the  distribution  of  wealth,  after  the  latter  has  been 
completely  produced,^ — at  the  efficiency  of  Production  and 
Natural  Exchange  when  Barter  is  superimposed,  as  com- 
pared with  Production  and  Natural  Exchange  alone, — it 
appears  that  in  1850  that  efficiency  was  practically  70  per 
cent.,  that  by  1880  it  had  fallen  to  50  per  cent,  and  that 
in  1900  it  had  gotten  down  as  low  as  34  per  cent!  The 
mos't  remarkable  thing  about  the  situation  is  that  the 
machine  has  not  ceased  operations  altogether,  absolutely 
stalled — so  labored,  so  noisy,  so  full  of  cross-purposes, 
interferences,  friction  and  impact,  developing  heat  and 
wear  at  every  contact,  is  its  lumbering  operation.  Mathe- 
matical probabilities  permit  the  estimate  that  by  the  time 
these  pages  reach  the  reader  ( 1905)  its  efficiency  will  have 
fallen  below  30  per  cent;  while  by  19 10,  unless  some 
fundamental  change  be  made  in  public  policy  and  law  in 
the  meantime,  this  figure  will  have  reached  the  impressive 
point  of  26  per  cent. — with  the  development  of  what 
degree  of  heat  of  controversy  and  conflict,  from  the  74 
per  cent,  of  national  energy  perverted  and  wasted  in  the 

»  It  must  be  remembered  here  that,  whereas  in  current  economic  dis- 
cussion the  term  "  distribution  "  is  commonly  used  to  refer  to  the  trans- 
portation or  to  the  retailing  of  material  commodities  between  the  factory 
and  the  consumer,  in  the  present  work  this  task  is  included  as  a  part  of 
the  work  of  Production.  The  term  "  distribution  "  is  here  reserved  to 
cover  the  apportionment  of  the  purchasing-power,  the  "  dividing-up "  of 
the  spoils,  resultant  from  the  nation's  current  production  (including  trans- 
portation)   of  Value. 


264  THE    COST    OF    COMPETITION 

conflict  called  competition,  and  with  what  further  insta- 
bility of  social  life,  no  man  may  dare  to  predict. 

A  great  deal  is  being  said  in  the  current  periodical  press, 
chiefly  by  the  hard-headed,  self-made,  "  practical  "  man, 
about  the  inefficiency  of  the  lower  classes  as  the  cause  of 
all  poverty.  The  industrial  organization,  just  analyzed  as 
to  its  efliciency,  lies  wholly  in  the  control  and  under  the 
direction  of  the  topmost  classes  (scaled  In  a  commercial 
sense),  in  the  hands  of  the  very  class  of  men  who  make 
these  unjust  and  superficial  statements.  Where  is  the  man 
among  them  who  would  tolerate  in  his  own  factory  or 
office  an  efficiency  of  organization  as  low  as  70  per  cent., 
a  loss  of  30  per  cent,  due  purely  to  its  members  being  per- 
mitted to  work  at  cross-purposes  and  with  duplicated 
effort?  Who  among  them  would  permit  that  efficiency 
to  fall  steadily  with  the  passing  years  without  doing  some- 
thing adequate  to  prevent  it?  Who  among  them  would 
for  an  instant  deny  that  he  ought  to  be  summarily  dis- 
missed from  authority,  in  disgrace,  if  he  let  It  drop  from 
70  per  cent,  to  60,  from  60  to  50,  from  50  to  40,  and  let 
it  finally  touch  30  in  the  opening  years  of  this  twentieth 
century  of  promise,  before  he  gathered  himself  together 
to  the  realization  that  things  were  going  radically  wrong 
and  that  decisive  action  in  the  direction  of  fundamental 
reform  were  absolutely  necessary? 

Is  Nicholas  Romanoff  alone  in  his  bourbonism?  Is 
he  so  fjecullarly  incompetent?  Have  these  captains  of 
industry  and  arbiters  of  human  destiny  no  other  remedy 
to  offer  for  such  egregious  maladministration  than  a  little 
lower  tariff,^"  a  variation  in  the  currency,  a  few  more 
libraries,  a  little  more  science,  an  additional  park  or  play- 

10  Because  this  argument  aims  at  tlie  clear  understanding  of  fundamentals, 
as  a  first  requisite  for  understanding  details,  the  discussion  of  such  an 
important  subject  as  the  tariff  is  relegated  to  a  brief  footnote  such  as  this. 
The  occasion  cannot  be  passed,  however,  without  at  least  the  bare  state- 


THE    GROWTH    OF    DISSIPATION  265 

ground?  These  are  all  good,  but  all  except  the  first  have 
grown  steadily  while  this  inefficiency  has  also  grown.  Are 
these  leaders  of  men  so  incapable  as  not  to  see  the  micro- 
scopic disproportion  of  these  alleged  remedies  to  the  social 
disease  for  which  they  are  prescribed,  their  gross  irrele- 
vancy to  the  problem  presented  by  a  national  efficiency, 
not  of  average  units,  but  purely  of  organization  of  those 
units,  of  a  bare  thirty-odd  per  cent.?  Are  they  so  super- 
ficial as  not  to  see  that  the  lack  of  playgrounds  and  schools 
and  libraries  and  free  trade  are  an  incidental  result,  and 
in  no  sense  a  precedent  cause,  of  this  inefficiency?  The 
organization  which  is  so  inefficient,  the  industrial  and  com- 
mercial organization  which  makes  all  wealth  and  all 
poverty,  is  wholly  within  their  hands;  the  parks  and 
schools  and  libraries  and  the  tariff  are  in  the  people's.  It 
is  the  commercial  magnates  who  enjoy  all  the  privileges  of 
industrial  control;  upon  them  lies  the  fullest  responsibility 
for  its  net  results.     Are  they  stupid  and  inefficient,  these 

ment  that  of  all  of  the  instruments  employed  by  the  barterers  for  both 
hoodwinking  the  people  and  at  the  same  time  forcing  from  their  pockets  a 
larger  profit  than  would  otherwise  be  possible,  no  single  one  can  be  men- 
tioned which  has  been  operated  upon  so  gigantic  and  systematic  a  scale  as 
has  the  tariff.  It  cannot  be  considered  possible  that  the  enormous  growth 
of  profit-making  enterprise  shown  by  these  diagrams  would  have  been 
feasible  without  its  aid.  If  the  "  encouragement  of  infant  industries  "  may 
be  taken  to  mean  the  inflation  of  profit-making  powers,  then  the  tariff  has 
been  phenomenally  successful  in  accomplishing  just  what  it  set  out  to 
accomplish.  But  it  cannot  be  supposed  that  the  people  have  understood 
the  proposition  in  those  terms. 

As  these  pages  are  being  written  arises  one  of  the  most  striking  bits  of 
evidence  of  the  complete  control  which  profit-seeking  has  obtained  in  the 
most  civilized  countries,  and  of  the  insistency  of  its  growth:  in  the  British 
agitation  in  favor  of  a  tariff.  There  the  profit-seekers  have  found  that 
they  cannot  successfully  compete,  without  its  aid,  with  those  countries 
which  possess  it.  All  talk  of  its  consolidating  the  empire  is  a  mere  dress- 
parade  argument  to  cover  this.  But  the  success  which  this  implies  that 
they  will  gain,  from  its  acquisition,  is  not  the  success  of  the  people,  but  the 
"  prosperity  ''  of  the  money-makers,  evidenced  chiefly  by  the  discontented 
strikes  of  the  laborers  and  by  high  prices  to  the  consumer. 


266  THE    COST   OF   COMPETITION 

barons  of  commerce,  that  matters  get  into  such  shape  in 
their  hands,  and  puerile,  that  they  offer  such  childish 
remedies?  Or  are  they  merely  unpatriotic  and  selfish,  not 
really  interested  in  that  task  of  supplying  the  people 
cheaply  which  they  so  noisily  claim  as  their  own  divine 
right,  when  advantage  is  to  be  gained  thereby — going  to 
the  greatest  trouble  to  attain  those  "  understandings " 
whereby  the  market  is  controlled  and  prices  enhanced,  but 
offering  never  a  conference  aimed  at  the  elimination  of 
all  profit  and  the  supply  of  commodities  at  the  cost  of 
production  ? 

The  country  is  waiting  for  an  answer;  but  it  will  not 
wait  long  nor  patiently.  The  Consumer  pays  all  the  bills. 
He  buys  the  raw  material,  hires  the  labor,  rents  the 
ground,  interests  the  capitalist  and  pays  the  cost  of  barter 
and  the  net  profit — through  his  agent,  the  manufactur- 
ing superintendent  or  manager.  The  employer,  the 
capitalist,  the  bargainer  and  the  laborer  are  alike  his 
stewards.     From  them  all  he  is  soon  to  exact  an  account. 

For  the  consumer,  as  an  average  man,  sees  plainly  that 
something  is  wrong,  that  life  is  not  bringing  to  him  what  it 
ought;  that  it  is  bringing  to  a  few  others,  if  not  more  than 
it  ought,  at  least  very  much  more  than  it  does  to  his 
equally  deserving  self  and  family.  Though  he  cannot 
yet  see  how  it  comes  about,  it  will  not  be  long  before  he 
does.  The  situation  is  complex,  the  robber's  tracks  are 
skillfully  covered  and  are  easily  lost  in  the  crowd;  but  only 
for  a  time  will  their  evasions  suflice.  For  the  moment 
only  is  the  conclusion  commonly  rife  that  the  country  is 
going  to  the  demnition  bow-wows  and  that  naught  can  be 
done  to  help  it.  For  it  is  too  plain  that  it  is  not,  that  it 
is  merely  gravitating  into  the  hands  of  the  demnition  bar- 
gainers. Like  a  black  tornado-cloud  out  of  a  clear  sky, 
filling  the  whole  visible  horizon,  their  burden  of  economic 


THE    GROWTPI    OF    DISSIPATION  267 

dissipation  of  a  nation's  wealth  is  sweeping  over  the 
doomed  land.  There  must  be  few  who  cannot  see  it.  Its 
dire  weight  of  whirlwind  disgregation,  destruction  and 
death  bears  down  upon  our  fair,  free  civilization  with  a 
menace  immediate  and  awful. 

Fortunately,  though,  in  its  track  are  no  dark  cyclone- 
cellars  for  men  to  flee  to,  calling  witness  to  the  wrath  of 
God.  From  this  gigantic  penalty  for  our  ignorance  and 
selfishness,  nationally  organized,  there  is  no  escape  and  no 
excuse.  Face  to  face  with  It  must  the  nation  stand,  as  a 
man,  acknowledging  the  ogre  as  the  child  of  its  own  past 
folly,  fighting  now  Its  own  unnatural  offspring  to  a  finish, 
for  life  or  death.  For  from  the  hands  of  the  bargainers 
we  must  wrest  back  our  own,  our  heritage  of  freedom,  of 
initiative  and  of  full  enjoyment  of  what  prosperity  we 
ourselves  produce,  or  we  must  die.  As  a  rope  of  sand,  as 
a  mere  mass  of  uncohering  particles,  formless,  forceless 
and  without  issue,  we  may  continue  to  exist  without  It. 
But  as  a  nation,  a  unit-people,  possessing  a  concrete  past, 
an  origin  of  which  we  are  not  ashamed,  a  present  we  dare 
to  call  our  peculiar  own  and  a  future  destiny  the  mold 
for  which  we  even  now  carve  fearlessly — as  all  such  with- 
out It  we  must  die,  as  surely  as  we  must  have  died  had  we 
faltered  and  failed  In  1863. 

Injustice  to  the  Individual.  But  the  side  of  the  situa- 
tion which  rises  higher  than  mere  questions  of  economic 
efliciency,  into  those  of  public  justice  and  individual 
liberty,  remains  yet  to  be  diagrammatically  displayed. 
Since  the  proportion,  both  of  enforcedly  unemployed  and 
of  those  accepting  the  starvation-wage,  to  the  total  popula- 
tion of  their  layer  Is  directly  dependent  upon  the  propor- 
tion of  competitive  to  productive  effort.  Fig.  15  has  been 
arranged  to  display  this  last.  (See  also  pages  168  and 
169.)      In  It  the  curve  A  A  -gives  the  proportion  between 


268 


THE    COST   OF   COMPETITION 


the  wealth  going  to  Class  A  and  to  capitalism,  on  the  one 
hand,  and  to  the  entire  Productive  Division,  including  the 
fractions  of  Classes  B  and  C,  on  the  other.     It  Is  to  be 


y 

f^O 

/D 

• 

3.0- 

/ 

"i 

-30 

/ 

i         1    ^y^ 

^-B-"'^            1         y 

/^^^""^        I  /K 

1.0- 

\    Jy 

/i 

-lO 

_s^V^l^ 

-T 

0.5- 

^       !    y^    \ 

1                  '        B 

-5 

^_A____jX              ' 

i        i 

1        1 

j86o 


ia6o 


■i^ro 


i88o 


iSpo 


ipoo 


Fig.  15.  The  Comparative  Growth  of  Productive  and  Competitive 
Activities:     Aggregate  and  Individual 

read  upon  the  left-hand  scale.  It  is  the  same  curve  as  A  J 
of  Fig,  14,  but  with  capitalism  added,  showing  that  the 
latter  has  not  grown  nearly  so  rapidly  as  has  pure  barter; 


THE    GROWTH    OF    DISSIPATION  269 

the  earnings  of  capitalism,  however,  fall  into  practically  the 
same  hands  which  receive  those  coming  from  pure  barter. 

The  curve  BB  displays  the  growth  of  average  individual 
income  of  the  producers,  referred  to  the  right-hand  ver- 
tical scale  read  as  hundreds  of  dollars  per  annum.  This 
curve  is  not  to  be  taken  as  displaying  actual  incomes;  it  is 
a  species  of  coefficient,  proportional  to  them  and  not  very 
far  from  coincidence  with  them. 

The  curve  CC  shows  the  growth  of  individual  incomes 
for  the  bargainer-class  by  similar  coefficients,  and  should 
be  referred  to  the  right-hand  scale  read  in  thousands  of 
dollars  per  annum.  It  applies  to  Class  A  and  three- 
quarters  of  Class  B  taken  together,  all  capitalism  being 
assigned  to  them  also. 

The  curve  DD  shows  the  growth  of  proportion  between 
these  individual  incomes  and  those  received  by  the  indi- 
vidual producers.  It  is  to  be  referred  to  the  right-hand 
scale,  read  as  units. 

The  curve  BB  shows  the  income  of  the  producer  to  be 
steadily,  though  slowly,  increasing.  This  is  undoubtedly 
true,  when  measured  in  dollars  and  when  the  unemployed 
are  left  out  of  consideration.  Whether  it  has  grown  or 
not  when  the  purchasing-power  of  these  dollars  is  con- 
sidered, or  when  the  unemployed  (many  of  them  being  in 
our  asylums  and  prisons)  are  also  included,  as  necessarily 
supported  at  the  expense  of  production,  is  a  question  to 
which  no  definite  answer  can  be  given  here.^^ 

The  curve  AA  gives  a  measure  of  the  growth  of  our 

11  It  is  perhaps  unnecessary  to  point  out  that  ahhough  the  taxes  which 
support  our  charitable  institutions  are  nominally  paid  chiefly  by  the  busi- 
ness-houses, yet  in  fact  the  entire  sum  is  paid  by  the  producer  and  con- 
sumer, between  them.  High  taxes,  always  included  as  one  of  the  "  costs 
of  doing  business,"  constitute  one  of  the  commonest  excuses  for  the  necessity 
for  low  wages  and  high  prices.  Every  cent  paid  out  by  the  bargainers  in 
the  form  of  taxes  is  charged  up  against  and  taken  out  of  the  public  in  one 
of  these  two  ways. 


270  THE    COST    OF    COMPETITION 

national  or  collective  loss  of  morals  involved  in  the  unjust 
distribution  of  wealth;  for  it  will  be  developed  later  that 
income  awarded  either  to  idleness  or  to  destructive,  dis- 
sipative  effort,  at  the  expense  of  productive  effort,  is  inevi- 
tably converted  into  a  destruction  of  either  public  or  pri- 
vate morals.  While,  as  ever  in  social  ethics,  the  penalty 
for  misconduct  does  not  necessarily,  nor  even  usually,  fall 
upon  the  individual  committing  the  fault,  it  falls  just  as 
surely  somewhere  within  the  body  politic. 

The  curve  DD  gives  a  measure  of  the  individual  injus- 
tice done  in  this  same  way.  In  1850  the  average  individual 
income  allotted  to  these  selected  classes  of  bargainers  was 
eleven  times  that  given  to  the  producer;  in  1900  it  had 
grown  to  be  thirty  times  as  great.^" 

Enforced  Idleness.  Indirect  evidence  in  incidental 
support  of  the  general  position  which  has  been  outlined  in 
the  preceding  pages  is  found  wherever  statistics  throw  any 


A 
B 
C 
T> 

Fig.     16.  Comparative  Percentage  of  Unemployed    in  the  Four 

Classes. 

light  whatever  upon  the  distinction  between  productive 
and  competitive  effort,  so  neglected  in  existing  collections 
of  data.  The  percentage  of  unemployed  in  the  several 
classes  in  1890  was:  A,  4.4;  B,  4.4;  C,  6.3;  D,  17.6. 
This  is  shown  graphically  In  Fig.  16.  The  unemployed 
are    present    In    all    four   classes,    showing    the    presence 

12  These  figures,  it  must  be  remembered,  are  based  upon  only  a  part  of  the 
total  population :  the  industrial  body,  consisting  very  largely  of  adult  males. 


TliE    GROWTH    OF    DISSIPATION 


271 


of  horizontal  competition  within  each.  They  are  most 
numerous  in  Classes  C  and  D,  showing  the  presence  of 
vertical  competition  between  the  several  classes.  The  same 
thing  is  visible  in  Fig.  17. 


Merchants: 

Bankers,  manufacturers 

and   officials   of   corpora- 
tions: 

Professional: 

Domestic : 

Laborers: 


Fig.     17.  Comparative    Percentages    of    Unemployed    in    Several 

Avocations 


Merchants: 

Bankers,  manufacturers 


and    officials   of   corpora- 
tions: 

Professional    (teachers 
shown   separately)  : 

Domestics  and  laborers: 


Fig,    18.  Comparative    Percentages    of    Unemployed    in    Several 
Avocations  of  Negro  Population 

A  comparison  of  Figs.  17  and  18  is  interesting.  In 
the  first  place,  if  unemployment  were  due  to  a  lack  of 
either  enterprise  or  efficiency  on  the  part  of  the  indi- 
dividual,  the  negro  race  should  certainly  show  a  much 
higher  percentage  of  unemployed  than  the  whites.  But 
it  does  not.  Its  average  percentage,  for  all  occupations, 
is  about  equal  to  that  in  the  professional  class  among  the 
whites,  the  one  class  embodying  the  highest  standards  of 
education  and  devotion  to  duty  found  within  the  nation. 
The  explanation  Is  that  both  the  negro  fieldhand  and  the 


272  THE    COST    OF    COMPETITION 

professional  white  belong,  economically  speaking,  together 
in  the  lowest  class,  that  of  the  producers,  which  suffers  most 
from  the  vertical  competition  of  the  bargainers  above  them. 
In  the  second  place,  the  difference  in  lack  of  employment 
between  the  several  sorts  of  occupation  is  much  less 
among  the  negroes  than  among  the  whites.  This  may 
be  partly  due  to  the  negro's  love  for  high-standing  titles 
and  occupations,  even  If  unremuneratlve;  but  It  Is  also 
largely  due  to  the  fact  that  In  the  agricultural  and  com- 
paratively backward  South  competition  Is  much  less  keen 
and  well-developed  than  it  is  in  the  more  commercial 
North.  This  alone  explains  how  it  happens  that  the  pro- 
portion of  unemployed  among  the  negroes  is  less  than 
one-third  as  great  as  It  is  among  white  domestics  and 
laborers,  a  class  certainly  surpassing  the  negro  In  both 
education  and  energy. 

The  Decline  of  Horizontal  and  the  Growth  of 
Vertical  Competition.  Fig.  19  shows,  by  Its  three 
curves,  factors  pointing  to  the  continuous  and  recently 
rapid  extension  of  the  above  process. 

Curve  A  shows  the  growth  of  capitalism  per  manufac- 
turing estabhshment,  In  terms  of  that  prevailing  in  1850 
as  unity. 

Curve  B  shows  the  growth  of  capitalism  per  employee 
in  the  same,  similarly  referred  to  that  of  1850  as  a  base. 

Curve  C  shows  the  proportion  of  capitalism  to  wages 
in  manufacturing  establishments,  similarly  referred  to  1850 
as  the  standard. 

In  Interpreting  these  curves  it  must  be  remembered  that 
they  are  based  upon  data  stated  In  terms  of  valuation,  not 
value. 

Curve  A  shows  the  growth  of  capitalism  per  manufac- 
turing establishment.  It  thus  measures  approximately, 
though  not  exactly,  the  progress  of  consolidation  in  manu- 


THE    GROWTH    OF    DISSIPATION  273 

facture.  To  this  extent  it  is  also  a  measure  of  the  dis- 
appearance of  horizontal  competition.  That  is  what 
consolidation  is  for:  ( i )  to  save  to  the  combining  estab- 
lishments   the    cost    of    mutual    competition;     (2)     to 


/85o  i860  1870  1880  idoo  1^00 

Fig.  19.  The  Decline  of  Horizontal  and  the  Growth  of  Vertical 

Competition 

strengthen  them  for  vertical  competition  against  the 
Labor  and  the  Consumer  below  them.  The  public,  think- 
ing competition  to  be  a  source  of  economy,  blames  them 
for  removing  it.  The  "  trusts,"  wishing  to  allay  the 
turbulence  resisting  their  taxation,  reply  that  the  people 
get  the  benefit  of  these  economies  due  to  the  elimination 
of  competition. 


274  THE    COST    OF    COMPETITION 

It  is  doubtful  if  it  be  worth  while  to  disprove  that  state- 
ment, or  misstatement.  It  is  doubtful  if  any  serious-minded 
person  takes  it  seriously.  But  if  disproof  be  needed,  these 
various  curves  give  it.  If  the  horizontal  competition  which 
disappears  is  not  replaced  by  that  more  vigorous  vertical 
competition  against  the  consumers  and  employees  below 
for  which  the  situation  gives  opportunity,  then  all  of  these 
curves  should  show  a  decrease  of  all  of  those  factors  which 
are  the  inevitable  accompaniment  of  competition.  In 
other  words,  if  the  decrease  in  horizontal  competition 
which  is  plainly  visible  in  current  consolidation  is  accom- 
panied by  that  decrease  in  vertical  competition  which  the 
trusts  allege,  then  the  total  competitive  effort  of  the  country 
must  be  doubly  on  the  decrease,  and  all  of  these  curves 
will  show  it.  But  none  of  them  do  so.  The  total  amount 
of  competitive  effort  is  plainly  shown  to  be  steadily  and 
rapidly  upon  the  increase.  It  is  hinted  at  by  curves  B  and 
C  of  Fig.  20,  each  showing  a  part;  it  is  shown  in  full  by 
the  total  darkened  area  of  Fig.  12.  Since  the  equally 
steady  and  rapid  decline  of  the  total  volume  of  horizontal 
competition  is  universally  admitted  to  be  taking  place 
(although  the  intensity  of  competition  over  each  detailed 
transaction  which  still  lies  open  to  it  is  ever  increasing), 
this  must  mean  that  both  the  volume  and  the  keenness  of 
vertical  competition  is  increasing  in  geometrical  ratio. 
This  conclusion  is  corroborated  by  any  cursory  observa- 
tion of  current  economic  progress :  the  rising  prices  of  the 
staple  commodities  and  the  decreasing  purchasing-power 
of  the  wage-earning  consumer. 

The  Evolution  of  Manufacturing  Methods.     The 

tendencies  of  the  times  are  shown  plainly  in  the  prog- 
ress of  manufacturing  conditions  during  the  decade  from 
1890  to  1900,  though  the  statistics  of  manufactures  do 
not  commensurately  reveal  the  similar  progress   for  the 


THE    GROWTH    OF    DISSIPATION  275 

country  as  a  whole  because  of  the  specialization  upon  com- 
petition which  has  already  been  mentioned.  During  the 
decade  in  question: 

PER    CENT. 

The  Number  of  Salaried  Officials,  Clerks, 

etc.,   decreased 14 

Their  aggregate  salaries  increased 3 

The  Wages  of  the  Workmen  increased.  .  23 
The  Valuation  of  the  Products  increased.  .  39 
The  Valuation  of  Raw  Material  consumed 

increased 42 

The  Capitalism  increased 50 

The  "  Miscellaneous  Expenses,"  which  in- 
cludes the  bulk  of  those  chargeable  to  the 
Cost  of  Competition,  increased 63 

Most  of  the  "  salaried  officials  and  clerks  "  are  those 
engaged  in  shop-accountance.  The  decrease  in  their 
numbers  shows  plainly  the  consolidation  going  on.  The 
increase  of  3  per  cent,  in  their  incomes  cannot  con- 
stitute a  true  increase  in  proportionate  activity  gone  in  this 
direction,  for  the  products  resulting  from  their  efforts  have 
at  the  same  time  increased  by  39  per  cent.  In  fact, 
the  figures  only  become  illuminative  when  based  upon 
valuation  of  output.  Thus  translated  they  appear,  in  per- 
centage of  alteration  per  dollar's  worth  of  commodities 
produced: 

PER   CENT. 

Number  of  Clerks,  etc.,  decreased.  ...  38 

Their  aggregate  salaries  decreased.  ...  26 

Aggregate  wages  decreased 1 1  •  5 

Valuation  of  Raw  Material  increased.  .  2.2 

Capitalization    increased 8 

Miscellaneous   expenses   increased 17 


276  THE    COST    OF    COMPETITIOxN 

If,  as  is  urged  by  the  "  trusts,"  and  by  most  business- 
men as  well,  the  valuation  of  commodities  visible  in  their 
market-price  is  based  upon  their  cost  of  production,  the 
saving  of  cost  through  consolidation  going  to  the  consumer, 
why  do  not  the  figures  for  wages  and  salaries  saved  find 
the  figures  for  valuation  of  output  following  them  closely? 
Since  they  most  plainly  do  not,  where  does  the  saving  go 
to?  Most  plainly,  also,  into  those  items  which  have 
increased.  Wages  and  salaries  have  both  decreased  per 
dollar's  worth  produced;  capitalization  and  "miscel- 
laneous expenses  "  have  increased  and  swallowed  the  sav- 
ings up.  Increase  of  capitalization  means  increased 
interest-payments.  Increased  "  miscellaneous  expenses  " 
means  the  stretching  of  an  elastic  canopy  which  covers, 
we  fear,  a  multitude  of  sins.  Not  only  does  it  include 
such  normal  items  as  advertising,  legal  counsel,  etc.,  which 
are  purely  costs  of  competition,  but  it  is  usual  to  charge  up 
to  just  such  non-committal  ledger-accounts  the  payments 
made  upon  the  most  questionable  scores  which  investiga- 
tion of  the  corruption  of  government  officials  has  yet 
revealed.  That  such  might  naturally  be  the  case  is  the 
more  obvious  because  the  elimination  of  horizontal  com- 
petition between  peers,  which  is  so  evident  in  the  dismissal 
of  the  clerks,  correspondingly  eliminates  all  excuse  for 
increase  in  the  more  legitimate  expenses  of  competition, 
such  as  advertising,  etc.  The  extra  money  made  available 
by  this  saving  is  used  to  somewhat  increase  the  intrench- 
ment  of  the  organization  against  the  demands  of  labor, 
but  much  more  generally  to  fortify  it  more  impregnably 
against  the  consumer.  And  when  horizontal  competition 
is  once  removed,  the  only  rampart  left  to  the  consumer  is 
his  representative  government  and  its  law.  It  is  against 
the  disruption  of  this  institution,  therefore,  that  the  most 
powerful  ammunition  of  the  barterer  is  directed. 


THE    GROWTH    OF    DISSIPATION  277 

Fig.  20  presents  the  general  lines  of  recent  evolution 
of  the  manufacturing  portion  of  our  industrial  body,  based 
upon  the  statistics  of  manufactures  in  the  United  States 
censuses.  The  several  curves  show  the  variation  of  the 
several  factors  entering  into  manufacture  per  miUion-dol- 
lars'-zvorth  of  product.  The  object  of  this  choice  of  basis 
is,  among  others,  to  eliminate  temporary  fluctuations  in 
the  prices  in  which  commodities  are  measured.  That  this 
is  accomplished  is  shown  approximately  by  the  regularity 
of  the  curve  EE,  exhibiting  the  value  of  raw  material 
entering  into  each  million  dollars'  worth  of  output.  The 
only  reason  why  this  might  vary  is  the  inclusion,  in  the 
later  decades,  of  a  greater  amount  of  alteration  of  this 
raw  material  in  a  single  "  establishment,"  as  the  result  of 
consolidation,  which  would  cause  the  curve  to  drop. 
Although  "  consolidation  "  does  not  necessarily  imply  this, 
referring  rather  to  consolidation  of  ownership  than  of 
factories,  it  is  quite  likely  to  have  happened.  If  it  has, 
it  is  not  revealed  by  the  curve,  which  remains  sensibly 
horizontal.  The  only  thing  which  could  keep  it  so,  in  the 
face  of  such  concentration  of  productive  processes,  is  a 
general  rise  in  prices  of  raw  material,  which  is  also  quite 
probable,  though  not  proven. 

Curve  AA  shows  the  number  of  establishments  per 
unit-valuation  of  output  to  have  enormously  decreased. 
Viewed  upside  down,  this  would  give  an  idea  of  the  valua- 
tion of  output  per  establishment.  This  proves,  more  than 
anything  else,  that  the  scale  upon  which  all  productive 
processes  is  carried  out  has  grown  egregiously. 

The  curve  BB  shows  the  capitalization  per  unit  of  valua- 
tion of  output.  Until  1880  the  natural  tendency  of  the 
real  worth  of  material  capital  per  unit  of  output  to  remain 
constant  is  obvious;  but  by  that  year  the  bargainers  had 
learned    the    value    which    could    be    diverted    into    their 


THE    COST   OF    COMPETITION 


D 


A 


E 


.B 


'B 


-ZOO 


-iOO 


i860  .36o  iS-^o  iS8o  iSoo  IQ00 

Fig.  20.  The  Tendencies  of  the  Times  in  Factory-organization 


THE    GROWTH    OF    DISSIPATION  279 

pockets  by  the  artificial  inflation  of  the  capitalization 
attached  to  this  capital,  and  thereafter  it  rises  rapidly. 

The  curve  CC  shows  the  number  of  wage-earners  per 
unit  of  output,  steadily  decreasing.  Now,  if  it  were  true 
that  the  wage  of  the  producer  were  based  upon  his  pro- 
ductivity, this  very  marked  drop  in  the  number  of  workers 
required  to  produce  a  unit  of  valuation  should  result  in 
the  return  to  the  wage-earners  of  an  inverse,  a  greater, 
proportion  of  the  valuation  produced.  Curve  DD  shows 
what  they  actually  get.  Instead  of  its  being  in  inverse 
proportion  with  CC  it  is  in  direct  and  fairly  proportionate 
parallelism:  the  less  the  number  of  workers  required  to 
produce  a  dollar's  worth  of  goods  (or  the  greater  valua- 
tion produced  per  workman)  the  less  of  that  dollar  goes 
to  labor  as  wages. 

The  curve  FF  shows  the  decrease  in  number  of  "  salaried 
officials,  clerks,  etc." ;  also  quite  approximately  the 
decrease  in  aggregate  cost  for  their  salaries.  It  is  this 
saving  which  the  "  trusts  "  assure  the  public  it  is  the  object 
of  their  consolidations  to  conserve  to  the  people. 

How  sincere  is  this  representation  is  shown  by  the  curve 
GG,  which  exhibits  the  increase  in  "  miscellaneous  ex- 
penses," going  wholly  to  increased  cost  of  competition, 
and  (as  pointed  out  above,  since  this  very  consolidation 
has  decreased  horizontal  competition)  entirely  to  increased 
keenness  of  vertical  competition  against  the  consumer. 

How  sincere  is  this  representation  is  also  shown  by 
adding  together  the  expenses  for  the  "  salaried  officials 
and  clerks  "  (which  was  to  be  saved  to  the  public)  and  the 
"  miscellaneous  expenses  "  having  chiefly  for  their  object 
the  more  complete  enthraldom  of  the  public  in  the  power 
of  these  barterers.  In  1890  the  two  together  amounted 
to  $109,100  per  million  dollars'  worth  of  manufactured 
commodities;  in   1900  they  amounted  to  $109,900.     All 


28o  THE    COST    OF    COMPETITION 

that  was  saved  by  the  consolidation,  and  more,  has  been 
lost  in  increased  "  cost  of  doing  business."  So  far  as  the 
public  can  see  from  these  items  alone,  it  has  lost  just  $800 
per  million  by  the  ten  years'  progress.  But  in  point  of 
fact  it  has  lost  very  much  more;  for  the  $11,700  of 
increased  cost  of  doing  business  per  million  has  been 
expended  entirely  in  insuring  the  further  loss  of  the  public 
in  other  departments  of  supply  than  mere  manufacture, 
in  trade,  transportation  and  finance,  none  of  which  is 
visible  in  the  statistics  displayed. 

That  commercial  (not  factory)  consolidation  does  not 
necessarily  lead  to  economy  in  production  is  shown  by  the 
rise,  during  the  decade  of  1 890-1900,  of  the  curve  A  A, 
which  had  fallen  steadily  and  rapidly  since  1850.  During 
this  decade  the  consolidation  of  commercial  interests  was 
more  phenomenal  than  ever  before  in  economic  history, 
particularly  in  1898-99.  Yet  the  figures  show  an  actual 
decrease  of  valuation  of  output  per  "  establishment  " ;  the 
latter  word  being  understood  to  mean  the  material  fac- 
tory, and  not  the  unit  of  commercial  organization.  In 
either  case  the  showing  is  bad  enough. 

Specialization  Upon   Vertical   Competition.     The 

rapidly  increasing  specialization  upon  competition  makes 
any  direct  measure  of  this  increased  pressure  of  verti- 
cal competition  next  to  impossible.  Entire  corporations 
are  formed  for  the  purpose  of  carrying  on  competi- 
tion, relegating  the  actual  manufacture  more  and  more 
plainly  into  the  hands  of  salaried  superintendents  or  of 
quiescent  corporations  which  perform  the  same  function, 
the  latter  often  being  paid  in  the  same  manner.  Nor  is 
it  alone  that  these  corporations  specialized  upon  competi- 
tion are  getting  to  be  the  rule;  they  are  coming  to  monopo- 
lize the  best  personal  talent  of  the  country  and  to  grow  to 
a  size  which  their   productive   partners   do  not  seem   to 


THE    GROWTH    OF    DISSIPATION  281 

be  able  to  follow.  In  addition,  a  whole  species  of  other 
corporations  is  springing  up,  each  specialized  upon  some 
weapon  of  their  warfare.  There  are  corporations  for 
writing  their  advertisements,  and  corporations  for  illus- 
trating them.  There  are  corporations  for  mailing  their 
tracts.  There  are  corporations  insuring  them  against  the 
results  of  counter-attack  by  employees.  There  are  others 
insuring  them  against  a  like  desperation  on  the  part  of  the 
public.  There  are  corporations  for  providing  them  with 
capitalism.  There  are  corporations  for  securing  them 
franchises,  charters,  etc.;  of  which  last  class  by  far  the 
most  efficient  is  the  unchartered  corporation  known  as  the 
political  machine,  which  is  just  as  purely  a  profit-making 
organization  as  is  any  of  the  others,  and  for  which  these 
others  supply  the  daily  sustenance  and  vital  energy  in  their 
patronage  with  a  share  of  their  net  profits.  There  are 
even  schools  and  periodicals  devoted  to  training  for  suc- 
cess in  almost  every  department  of  the  above  tactics;  in 
all  of  which  "  success  "  means  pushing  your  neighbor  back 
and  getting  in  ahead  of  him — for  one  cannot  get  in,  in 
barter,  except  by  pushing  another  out. 

Referring  to  Fig.  7  (page  198),  the  increase  since  1850 
of  the  area  measuring  capitalism,  in  proportion  to  the 
area  lying  below  it,  is  indicated  in  part  by  curve  C  of  Fig. 
20.  It  is  only  in  part,  however,  for  Fig.  20  refers  only 
to  manufacturing  establishments,  and  the  great  bulk  of  the 
recent  expansion  of  capitalism  has  been  in  the  formation 
and  development  of  corporations  devoted  purely  to  bar- 
gaining, not  manufacturing.  The  growth,  though  com- 
paratively slow,  has  been  very  steady;  unbroken  even,  as 
have  been  most  of  the  other  processes,  by  the  Civil  War. 
It  is  thus  seen  that  the  doctrine  of  the  Karl  Marx  school 
of  socialists,  holding  that  poverty  is  due  to  the  income 
drawn  away  from  the  producer  by  capitalism,  while  pos- 


282  THE    COST    OF    COMPETITION 

sessing  a  firm  foundation  in  fact  in  so  far  as  some  income, 
and  a  steadily  increasing  one,  is  thus  abstracted,  is  never- 
theless totally  incommensurate  to  explaining  the  situation. 
Fig.  7  itself  shows  this.  Also,  compare  curve  DD  of 
Fig.  14  with  curve  C  of  Fig.  20.  The  former  is  what 
the  producer  is  losing;  the  latter  is  what  capitalism  is  gain- 
ing; portrayed  upon  comparative  vertical  scales,  more- 
over, which  almost  conceal  the  contrast  which  is  really 
there. 

The  same  argument  covers  Henry  George's  single- 
tax  explanations  of  progress  and  poverty.  Vertical  com- 
petition taking  the  form  of  private  ownership  of  land, 
or  landlordism,  is  oppressive  to  the  producer.  There  can 
be  no  question  as  to  that.  The  same  is  true  of  vertical 
competition  taking  the  form  of  the  private  ownership  of 
the  material  aids  utilized  in  production,  which  is  what 
Marx  indicts.  But  both  together  constitute  only  the  area 
labeled  "  capitalism "  in  Fig.  7.  They  are  hopelessly 
outclassed  when  it  comes  to  explaining  the  enormous 
volume  and  the  bitter  intensity  of  the  oppression  of  the 
producer  which  results  from  the  combination  of  both  ver- 
tical and  horizontal  competition,  of  landlordism,  capital- 
ism, barter-cost  and  net  profits  heaped  together,  with  the 
Submerged  Tenth  for  a  foundation  and  an  essential  part. 

Production  and  Consumption.  If  that  portion  of 
Fig.  12  which  applies  to  the  year  1890  be  compared  with 
Fig.  17,  a  very  important  point  of  contrast  is  revealed. 
Earlier  in  the  analysis  it  was  shown  that  while  the  presence 
of  barter  enforced  an  equivalent  deduction  from  the  pur- 
chasing-power of  the  entire  population,  and  that,  in  turn, 
the  idleness  of  a  minority,  yet  the  number  of  absolutely 
idle  was  a  small  one  in  comparison  with  the  volume  of 
competition.  In  other  words,  that  the  tax  put  upon  Labor 
by  Barter  is  distributed  over  the  entire  body  fairly  evenly, 


THE    GROWrH    OF    DISSIPATION  2.^3 

reducing  all  Individuals  to  a  purchasing-power  far  below 
their  natural  productivity,  but  reducing  only  a  few  to 
complete  idleness.  For  these  statements  there  is  now 
some  statistical  support.  The  figures  show  that  in  1890, 
for  instance,  59  per  cent,  of  the  nation's  purchasing- 
power  was  dissipated  in  competition.  In  that  year  the 
percentage  of  unemployed  population  varied  from  0.8 
to  II  .4  per  cent.,  according  to  class;  and  as  the  purchas- 
ing-power represented  by  the  classes  revealing  the  greatest 
proportion  of  unemployed  is  much  less  per  capita  than 
that  of  the  others,  it  is  probably  fair  to  say  that  not  over 
3  per  cent,  of  the  total  purchasing-power  was  allotted 
to  population  entirely  idle.  In  other  words,  41  per 
cent,  of  the  total  purchasing-power,  which  portion  alone 
is  expended  for  life-giving  commodities  which  are  actually 
consumed  and  subsisted  upon  by  the  entire  Productive 
Division,  is  capable  of  furnishing  support  for  fully  97 
per  cent,  of  the  total  industrial  body,  and  for  more  than 
97  per  cent,  of  the  country's  industrial  ability.  It  is  this 
fact  alone  which  has  permitted  competitive  effort  to 
assume  such  egregious  proportions  without  either  actually 
starving  the  community  into  extinction  or  oppressing  it 
into  bloody  revolt. 

The  bearing  of  this  fact  upon  our  understanding  of  the 
relation  between  production  and  consumption  is  marked. 
It  corroborates  the  statement  already  made,  viz. :  that 
human  ability  to  consume  is  the  most  elastic  factor  in 
social  energetic  phenomena.  Upon  an  earlier  page  we 
urged  its  ability  to  expand  indefinitely,  as  fast  as  permitted 
by  expanding  supply.  Now  we  see  its  ability  to  undergo 
compression.  In  the  productive  classes  is  instanced  the 
ability  to  maintain  life,  continuously  and  productively,  in 
simple  but  in  one  sense  wholesome  fashion,  upon  a  pur- 
chasing-power or  consumption  equal  to  about  one-third  of 


284  THE    COST    OF    COMPETITION 

the  actual  productivity  sustained  thereon.  In  the  layer 
of  barter  and  capitalism  is  instanced  the  ability  to  con- 
sume, in  the  economic  sense  of  the  word  at  least,  a  cur- 
rent income  not  only  far  greater  than  the  productivity 
which  is  supported  thereon  (and  which  is  often  zero), 
but  greater  than  any  degree  of  individual  productivity  yet 
known  to  man.  In  other  words,  to  whatever  point  the 
allotment  of  purchasing-power  may  be  artificially  shrunken, 
or  swollen,  provided  only  that  it  does  not  fall  below  the 
starvation-wage,  consumption  easily  and  promptly  fol- 
lows it.  Viewing  all  biological  factors  together,  the 
lower  limit  of  fluctuation  is  the  starvation-wage;  below 
that  life  is  impossible.    There  is  no  upper  limit. 

When  the  pessimists  wish  to  explain  poverty  they  urge 
the  great  faculty  for  unlimited  consumption  evinced  by 
the  unthrifty,  extravagant  poor,  so  frequently  exceeding 
their  income — in  short,  that  the  trouble  with  the  country 
is  that  the  lower  classes  consume  too  much.  When  these 
same  pessimists  wish  to  explain  the  common  lack  of  oppor- 
tunity for  employment  and  the  apparent  necessity  for  low 
wages,  they  point  out  that  the  trouble  with  the  country  is 
that  it  does  not,  cannot  possibly,  consume  all  that  it  can 
produce,  whence  some  must  be  idle — in  short,  that  all 
classes  consume  too  little. 

The  true  statement  of  the  case  is  that  whereas  the  con- 
sumptive power  of  all  classes  of  a  people  is  always  bio- 
logically unlimited,  economically  it  is  always  narrowly 
limited,  by  its  allotted  purchasing-power.  There  is  no 
such  thing  as  overproduction,  of  which  the  manufacturers 
so  bitterly  complain  when  excusing  to  the  public  their 
efforts  to  put  up  prices  by  restricting  the  output;  the  sup- 
pliers of  shoes  or  beef  or  flour  need  lisp  no  faintest  syllable 
of  complaint  of  overproduction  so  long  as  so  many  are 
barefooted    and    hungry.      The    trouble    everywhere     is 


THE    GROWTH    OF    DISSIPATION  285 

underconsumption,  not  overproduction;  and  lower  prices, 
not  higher  ones,  are  what  is  needed  to  remedy  the 
situation. 

Nor  is  there  any  such  thing  as  overconsumption,  that 
terrible  crime  for  which  the  favored  few  indict  the  poor 
(who  consume  the  least)  when  sermonizing  them;  that 
crime  of  which  the  upper  economic  classes  alone  are  guilty, 
spending  upon  a  single  vulgarly  ostentatious  evening's 
entertainment  a  sum  which  would  solve  so  many  social 
problems  had  it  only  been  left  in  the  hands  of  those  who 
produced  and  earned  it. 

But  there  is  always  and  everywhere,  except  on  the  part 
of  this  small  and  seemingly  fortunate  minority,  that  really 
terrible,  tragic  social  fact:  Underpurchasing-power — a 
purchasing-power  below  actual  productivity  and  below 
natural  consumptivity,  a  purchasing-power  thus  artificially 
depreciated  by  Barter.  This  is  the  one  master-key  for 
unlocking  every  economic  phenomenon  which  is  now 
sealed  to  the  understanding. 

Congestion.  -One  of  the  most  direct  and  obvious 
results  of  the  competitive  system  is  geographic  social 
congestion.  Under  this  title  must  be  considered  some 
four  quite  distinct  sorts  of  congestion,  viz, :  ( i )  the 
Offices;  (2)  the  Residences;  (3)  the  Slums;  (4)  the 
Factories.  These  have  been  listed  in  the  order  of  their 
causative  effect,  of  their  remediability  and  of  their  impor- 
tance to  the  ethical  growth  of  the  community. 

The  political  economies  of  Karl  Marx  and  of  Henry 
George  are  the  only  ones  now  before  the  public  explain- 
ing general  social  phenomena,  such  as  congestion,  as  the 
fruit  of  institutions  rather  than  of  individual  choice.  From 
the  point  of  view  of  the  single-taxers  it  would  appear  that 
all  congestion  were  due  to  private  control  of  land-values. 
They   would   point  out   that   Edinburgh,    Barbados    and 


286  THE    COST    OF    COMPETITION 

Canton  were  congested  before  the  era  of  modern  com- 
mercial competition.  This  last  is  quite  true;  but  it  is  true 
only  because  antagonism  over  land-values  was  historically 
the  first  form  of  commercial  competition  to  become  politi- 
cally free  for  effective  activity.  Landlordism,  in  effect, 
is  as  old  as  the  feudal  system.  That  is  good  reason  for 
pointing  out  the  feudalistic  evils  of  landlordism.  At  the 
same  time,  it  is  a  poor  basis  for  urging  that  landlordism 
was  all  of  feudalism,  or  that  the  feudalistic  features  were 
the  only  objectionable  ones  of  free  landlordism. 

It  were  similarly  futile  to  attempt  to  confine  the  explana- 
tion of  all  forms  of  congestion  to  antagonism  over  land- 
values  alone.  The  old  question  of  the  land  and  the  man 
is  there,  it  is  true,  and  causes  congestion,  in  1905  as  well 
as  in  1805,  or  in  1405,  when  the  villages  were  crowded 
while  the  royal  preserves  were  spacious.  But  in  the 
passing  centuries  the  quarrel  over  opportunity  has  shifted 
ground  again  and  again,  and  the  land-question  has  found 
Itself  fighting  under  many  different  standards  and  with 
many  strange  companions.  But  it  has  never  been  a 
leader.  Always  a  helper,  always  an  unknown  esquire  to 
some  gallant  knight  of  the  fight  for  liberty,  under  whose 
standard  it  did  effective  work,  it  has  slowly  won  obscure 
advancement.  In  1405  It  was  bound  up  with  questions  of 
Individual  liberty  and  constitutional  freedom  from  mo- 
narchical oppression — vastly  larger  and  quite  distinct  ques- 
tions from  landlordism;  for  no  effective  freedom  of  land- 
tenure  were  imaginable,  assuming  the  abolition  of  serfdom 
and  landlordism  both,  under  the  political  and  legal  chaos 
of  the  fifteenth  century.  To-day  It  is  bound  up,  indls- 
solubly,  with  the  question  of  the  legal  assurance  to  every 
man  of  freedom  from  all  forms  of  economic  oppression — 
equally  larger,  more  Important  and  inclusive  questions 
because    the    effectiveness    of    legal    economic    oppression 


THE    GROWTH    OF    DISSIPATION  287 

depends  very  little  upon  the  particular  tool  or  weapon  of 
which  it  may  make  use,  whether  land,  capital  or  exchange. 
And  since  the  amount  of  contention  and  oppression  which 
can  be  centered  about  any  given  weapon  is  absolutely 
unlimited,  assuming  once  that  the  law  permits  contention 
at  all,  the  taking  from  the  hands  of  the  bargainers  of  all 
control  of  land-values  will  not  necessarily  restrict  the 
aggregate  volume  of  Barter  nor  the  oppression  of  the  poor. 
Assuming  the  land  to  be  perfectly  freed,  we  see  the 
individual  producer  still  standing  (figuratively,  of  course) 
idle  in  the  center  of  the  field  reserved  to  him  by  law, 
because  of  his  lack  of  access  to  tools,  to  cooperation  with 
other  workmen  and  to  a  market;  or  we  see  him  working 
frantically,  the  little  Value  which  he  may  be  able  to  dig 
single-handed  from  the  soil  becoming  absolutely  inade- 
quate to  support  life  under  present  populations  and 
methods,  because  diluted  to  any  degree  desired  by  the 
bargainer  before  it  may  become  purchasing-power  in 
exchange.  Until  he  had  undertaken  and  carried  into  effect 
a  demand  for  freedom  of  access,  as  an  inborn  right,  under 
the  protection  of  law  and  public  opinion,  to  those  tools 
which  are  the  creation  of  and  which  are  absolutely  essen- 
tial to  the  efforts  of  the  modern  armies  of  workmen  in 
Production,  and  to  the  public  market  which  is  equally 
essential  to  Exchange,  he  would  find  his  accomplished 
freedom  of  access  to  his  land  a  valuable  acquisition  only 
in  the  nature  of  an  established  principle  and  an  abstract 
precedent.  Economically  he  would  be  better  off  only 
temporarily,  until  expanding  Barter  were  able  to  reab- 
sorb this  new  lease  of  life  to  the  Producer,  this  new  growth 
of  its  prey,  this  added  possibility  of  extracting  profit  from 
the  producing-body  while  still  leaving  it  alive. 

This  is  why  the  land-tenure  question  was  not  settled 
when  serfdom  was  abolished  and  the  villein  freed  from 


288  THE    COST    OF    COMPETITION 

his  village,  nor  when  a  constitutional  government  was 
wrung  from  monarchical  despotism,  nor  even  when  the 
virility  of  Europe  had  landed  upon  a  virgin  western  con- 
tinent and  found  itself  free  to  effect  fundamental  reforms 
in  liberty's  name — 'there  never  being  a  finer  chance,  appar- 
ently, to  keep  the  free  land  free.  The  Supreme  Intelli- 
gence placed  in  its  hands,  instead,  a  democratic  form  of 
government,  freedom  of  political  action  and  of  religious 
belief,  both  feeding  the  soul  and  being  of  more  importance 
to  the  patriot  than  the  freedom  of  the  soil  which  feeds 
only  the  body — freedom  of  man's  attitude  toward  man 
coming  before  freedom  of  man's  attitude  toward  the  clod. 

Therefore,  in  these  pages,  the  use  of  land-values  as  a 
weapon  for  oppressional  barter  will  be  deemed  merely 
one  with  the  use  of  other  economic  opportunities  for  the 
same  purpose.  It  is  even  more  obvious  that  the  use  of 
capitalism  to  extract  current  taxes  from  the  producing- 
body,  which  is  the  basis  of  the  Marxian  conclusions,  is 
merely  another  subdivision  of  Competitive  Dissipation 
as  it  has  been  defined  in  earlier  pages. 

( I )  The  Offices  are  congested  because  men  cannot  bar- 
ter at  more  than  arm's  length  from  each  other.  The  pro- 
duction of  two  commodities  may  take  place  at  points  the 
most  widely  separated,  their  actual  exchange  may  take, 
place  upon  passing  freight-trains,  anywhere,  under  the 
guidance  of  factory-superintendents;  all  of  these  matters 
can  be  handled  by  correspondence.  But  the  question  of 
price  of  exchange, — assuming,  of  course,  that  there  is  a 
real  question  as  to  the  price,  to  be  settled  only  by  the 
expenditure  of  effort, — can  be  determined  only  by  eye- 
to-eye  conference,  by  audible  word  and  visible  gesture  of 
bargainer  to  bargainer.  Men  have  gathered  themselves 
into  company  for  all  manner  of  reasons  in  the  past;  but 
speaking  only  of  the  modern  phase  of  concentration,  which 


THE    GROWTH    OF    DISSIPATION  289 

has  reared  our  city-outlines  against  the  sky  from  fifty  to 
three  hundred  feet  above  the  soil  within  a  quarter-century, 
— considering  only  the  civilization  of  the  sky-scraper,  the 
subway  and  the  stenographer, — its  center  and  soul  is  the 
need  of  barter  between  man  and  man  before  each  little 
detail  of  exchange,  before  any  little  ton  of  rails,  bag  of 
coffee,  branch-railroad  in  Arizona  or  dozen  of  hairpins 
can  get  itself  transferred  to  the  ownership  which  needs 
it  from  that  which  needs  something  else. 

(2)  The  Residences  are  congested  because  the  Offices 
are  congested.  Men  cannot  meet  each  morning  for  barter 
in  Wall  Street  and  live  further  away  than  Stamford.  They 
prefer  to  live  not  further  away  than  Eightieth  Street.  If 
the  love  of  a  vine  and  fig-tree  is  strong  within  them,  if  they 
are  inspired  by  the  ideals  of  a  real  home  and  homestead 
for  their  children  to  grow  up  in,  they  will  undergo  the 
suburbanite's  daily  tortue  in  order  to  get  it.  If  they  hap- 
pen to  have  no  family,  or  if  they  are  weak  enough  to  fail 
to  appreciate  it  in  comparison  with  being  "  in  the  swim," 
they  will  consent  to  live  in  barracks  in  town.  The  whole 
natural  tendency  of  man  is  toward  the  vine  and  fig-tree, 
toward  seclusion  and  spaciousness  of  home,  however  he 
may  love  the  crowd  and  the  dust  in  his  work  and  his  war. 
It  is  the  artificial  tendency  alone  which  can  lead  him  to  for- 
get green  leaves  and  snow-white  fields  behind  velvet 
curtains. 

(3)  The  Slums  are  congested  because  the  Offices  and 
Residences  are  congested. 

The  first  step  in  establishing  this  statement  is  to  show 
the  fallacy  of  the  common  idea  that  the  slums  are  con- 
gested because  the  factories  are  congested.  This  is  obvious 
when  it  is  observed  that  the  cities  of  the  greatest  shim-con- 
gestion are  not  distinctly  factory-cities;  the  populations 
suffering  the  greatest  congestion  are  not  essentially  factory- 


290  THE    COST    OF   COMPETITION 

operatives.  It  is  of  course  true  that  many,  if  not  most,  fac- 
tory-populations suffer  an  undesirable  degree  of  congestion. 
But  so  do  many  other  classes  of  society;  all,  indeed,  except 
the  farmers,  who  are  too  much  isolated  for  health.  It  Is 
still  true  that  the  worst  congestion  is  not  coincident  with 
factory-life.  New  York  is  the  worst  congested  city  in 
America,  and  It  is  distinctly  not  a  manufacturing  city;  It 
is  a  business  and  a  residential  city:  the  center  of  commerce, 
transportation,  art,  amusement  and  social  luxury.  The 
population  of  its  East-Side,  while  containing  many  factory- 
workmen,  is  not  by  any  means  a  factory-population.  It  is 
typically  one  of  corner-grocers,  saloon-keepers,  janitors, 
domestics,  hucksters,  bootblacks  and  sweatshop  tailors. 

These  people  choose  to  live  in  this  place  and  way  for 
exactly  the  same  reason  that  any  other  individual  chooses 
his  own  peculiar  place  and  way  of  living:  because  it  is  the 
easiest.  The  office-buildings  down-town  and  the  residences 
up-town.  In  their  daily  chores  and  supplies,  offer  a  vast 
demand  for  steady  employment  which  cannot  be  par- 
alleled elsewhere  in  the  land.  Factory-demands  for  labor 
fluctuate  tremendously,  but  the  demand  of  a  settlement 
like  New  York  for  breakfast-foods  and  clean  collars 
varies  hardly  appreciably.  The  annual  Indignation  of  the 
daily  press  over  the  lack  of  fieldhands  to  harvest  the 
wheat-crops  of  Dakota, — three  weeks'  work  at  the  end  of 
a  thousand  miles  of  travel, — is  based  upon  the  most  super- 
ficial observation  of  other  people's  needs  and  opportunities. 
There  could  be  no  indignation  like  that  of  these  same 
worthy  city-bred  objectors  if,  awakening  some  fine  morn- 
ing, they  should  find  that  the  milkman  had  taken  their 
advice  and  gone  to  New  Hampshire,  a-haying,  that  the 
postman  was  raising  melons  In  Illinois  and  that  the  cook 
and  maid  had  married  Texas  ranchmen.  Nor  would  It 
equal  that  of  the  Western  cities  when,  six  months  later,  the 


THE    GROWTH    OF    DISSIPATION  291 

tramp-population  of  farm-people  unable  to  live  through 
the  winter  had  been  augmented  by  this  flood  of  "  relief  " 
of  Eastern  congestion.  There  is  no  problem  confronting 
the  lower  classes  like  that  of  steadiness  of  employment; 
and  nowhere  are  its  chances  so  good  as  In  a  great  congested 
city. 

Again,  these  people  live  in  great  cities  because  it  is 
cheaper  and  easier  than  elsewhere.  All  industries  can  be 
conducted  upon  a  large  scale  more  cheaply  than  on  a  small 
one,  and  this  statement  applies  fully  to  the  supply  of  food, 
clothing  and  shelter.  It  is  a  matter  of  observation  that 
nowhere  in  this  land,  not  even  in  Nova  Scotia  or  Alabama, 
can  the  necessaries  and  the  distractions  of  life  (the  former 
including  the  latter)  be  had  at  so  low  a  proportion  of 
average  income  as  in  Manhattan.  Life,  it  is  true,  is  there 
reduced  to  a  combination  of  food-supply  and  forgetful- 
ness;  but  that  is  the  inevitable  result  of  the  competitive- 
wage  system:  to  reduce  life  to  its  lowest  possible  terms. 
Moreover,  it  is  true  of  all  classes  in  Manhattan.  When 
the  upper  classes  are  content  with  a  twenty-foot  front  of 
brown-stone,  with  sunlight  in  one-quarter  of  its  rooms  and 
a  cobble-stone  nerve-rack  before  the  door,  how  can  the 
lower  ask  for  sunlight  at  all?  Two  rooms  and  a  window 
on  an  air-shaft  are  enough  for  anybody!  Both  upper  and 
lower  classes,  worse  luck,  believe  it.  They  both  accept 
it  for  exactly  the  same  reason:  that  it  is  easier  to  accept 
it  than  to  work  the  harder,  and  with  greater  uncertainty, 
for  light  and  air  elsewhere. 

(4)    The  Factories  are  congested  because  the  slums  are. 

It  is  first  to  be  noted  that  the  factories  are  the  least  con- 
gested of  any  of  these  items.  The  great  bulk  of  the  fac- 
tory-production of  the  country  is  carried  on  in  the  smaller 
cities,  towns  and  villages.  Even  the  few  distinctly  manu- 
facturing cities  of  the  larger  size,  like  Pittsburgh,  have 


292  THE    COST    OF    COMPETITION 

their  factories  scattered  over  an  exceedingly  wide  area, 
concentrating  into  centers,  such  as  Homestead,  Wilmer- 
ding  and  Allegheny,  which  are  separated  by  ample  oppor- 
tunity for  light  and  air.  But  the  typical  American  factory 
is  located  in  a  smaller  place  than  Pittsburgh,  of  one  to 
one  hundred  thousand  inhabitants,  or  even  smaller,  where 
access  to  open  fields  is  a  matter  of  a  few  moments  on  a 
trolley,  or  even  on  foot.  The  extreme  is  seen  in  New 
England,  and  in  some  Southern  States,  where  so  many 
efficient  mills  are  almost  hidden  in  some  bosky  vale, 
perched  on  the  hillside  by  a  bit  of  water-power,  with  the 
railroad  wriggling  in  along  the  river-bank. 

These  factories  locate  according  to  favorable  supplies 
of  power,  transportation  or  labor.  While  either  or  all 
may  be  the  determining  factor  in  any  single  case,  it  is  plain 
that  the  last  may  often  be,  and  is,  the  all-important  one. 
Therefore  those  factories  which  need  skilled  workmen  of 
some  taste,  or  clean-habited  young  women  from  the  self- 
respecting  walks  of  life,  choose  those  outlying  smaller 
cities  where  small  homes  may  be  secured  or  where  the 
farmers'  and  mechanics'  daughters  like  to  work  a  few 
years  between  school  and  marriage.  Those  factories  which 
want  the  cheapest  of  unskilled,  transient  help,  on  the  other 
hand,  can  find  a  steady  current  of  it  oozing  out  of  and 
being  reabsorbed  by  the  vast  mass  of  mixed  population  of 
the  slums.  That  is  the  reason,  and  the  only  reason  except 
special  ones,  why  a  minority  of  factories  crowd  into  the 
congested  districts  of  our  larger  cities,  where  land-rent  is 
high  and  transportation  difficult  and  costly. 

As  to  the  compression  of  the  factory  itself,  of  the  need 
for  the  close  association  of  an  army  of  workmen,  that  they 
may  cooperate,  factory-architecture  and  engineering  have 
already  progressed  (so  far  as  possible  against  the  resist- 
ance of  the  economic  forces  which  are  here  being  por- 


THE    GROWTH    OF    DISSIPATION  293 

trayed)  to  the  point  where  it  is  agreed  that  the  best  quality 
of  productivity  comes  from  a  series  of  low  and  spreading, 
well-lighted,  well-aired  buildings,  separated  by  tracts  of 
grass,  trees  and  flowers  when  the  ground  is  not  absolutely 
needed  for  railroad-tracks  and  driveways.  If  produc- 
tivity were  as  profitable  as  is  profit-seeking,  the  question 
would  have  been  settled  long  ago.  As  it  is,  where  a 
motive  for  beautifying  factory-surroundings  and  interiors 
exists  at  all,  in  the  presence  and  personal  interest  of  a 
capitalist-owner  of  taste  and  sensibility,  there  is  no  trouble 
in  putting  his  ideas  into  effect,  and  with  profit  to  the  fac- 
tory-community. Much  remains  to  be  done  in  this  line, 
it  is  true;  but  when  it  is  done,  as  it  surely  will  be.  It  will 
be  found  that  it  was  purely  economic,  and  not  engineering, 
discoveries  which  made  it  possible. 

But  if  the  economic  situation  is  to  be  understood,  it 
must  never  be  forgotten  that  every  one  of  this  myriad  of 
factories,  scattered  over  the  face  of  the  land,  has  an  oflice 
or  an  agent,  of  some  sort,  in  the  most  congested  district 
of  New  York,  if  not  in  several  other  great  cities  also. 
With  these  offices  is  constant  communication,  by  a  net- 
work of  wires  and  postal-routes,  and  from  these  barter- 
agents  come  the  orders,  or  the  lack  of  them,  which  make 
or  break  the  factories  and  their  hands.  It  is  the  profit- 
making  interests  of  the  agent,  not  the  productivity  of  the 
factory,  which  determines  whether  it  shall  live  amid 
green  grass  and  trees,  or  live  at  all,  or  not.  It  is  what  is 
done  on  Nassau  and  Cortlandt  Streets  which  determines 
the  purchasing-power  and  the  choosing-power  of  the 
hammer-blows  ringing  out  in  Pittsburgh  and  Dubuque. 

Congestion  as  a  Unit.  These  four  sorts  of  conges- 
tion all  possess  their  origin  in  competition  over  the  three 
chief  needs  of  economic  life:  land,  capital  and  exchange. 
Commercial  competition  over  land-values  consists  in  the 


294  THE    COST    OF    COMPETITION 

crowding  up  of  commercial  rent  above  natural  rent,  for 
the  sake  of  pocketing  the  difference,  and  of  holding  land 
vacant  for  the  sake  of  later  pocketing  the  unearned  incre- 
ment; both  of  which  force  people  to  squeeze  themselves 
into  smaller  and  smaller  compass  in  order  to  minimize  the 
effect  of  this  policy  which  may  fall  upon  their  shoulders. 

Commercial  competition  of  capitalism  with  consumer, 
securing  interest  and  dividends,  works  to  the  same  end  in  a 
number  of  ways.  It  increases  the  cost  of  transportation 
and  of  communication,  so  that  wide  areas  are  less  avail- 
able for  a  given  population  than  would  otherwise  be  so. 
It  increases  the  rental  paid  for  the  improvements  on  the 
land  over  their  natural  current  cost:  depreciation,  so  that 
a  low  rent  for  site  would  avail  little  to  decrease  conges- 
tion because  the  producer  could  not  afford  the  improve- 
ments which  are  essential  to  its  enjoyment.  It  increases 
the  cost  of  all  manufactured  or  transported  articles,  so 
that  a  lesser  fraction  of  the  producer's  income  may  go  to 
hiring  spacious  sites  and  buildings. 

Commercial  competition  over  exchange,  by  its  mere 
cost,  creates  congestion  in  a  manner  which  these  other 
causes  share,  but  to  a  degree  in  which  they  have  no  part, 
in  three  distinct  ways,  viz. : 

( 1 )  By  decreasing  the  demand  for  productive  labor 
below  natural  productivity,  and  thus  diminishing  natural 
incomes; 

( 2 )  By  diluting  the  purchasing-power  of  wages  actually 
received,  so  that  the  recipient  must  be  content  with  a  much 
smaller  scale  of  life,  including  land  and  improvements 
occupied,  than  would  otherwise  be  the  case. 

(3)  By  forcing  men  to  seek  a  much  more  frequent  and 
intimate  contact  with  each  other,  per  dollar's  worth  of 
production  effected,  than  is  even  now  deemed  essential  to 
the    administration    of    productive    processes.      For    the 


THE   GROWTH    OF   DISSIPATION  295 

management  of  different  lines  of  production  in  consonance 
to-day  merely  occasional  conferences  at  stated  dates,  of 
factory-superintendents  and  heads  of  departments,  are 
deemed  necessary;  but  for  the  pushing  for  the  orders  which 
keep  these  factories  at  work,  or  for  the  maintenance  or 
inflation  of  the  price  at  which  its  goods  are  sold,  must  go 
the  constant  strenuous  endeavor  of  the  bargainers  who 
represent  them  upon  the  market. 

Each  of  the  four  sorts  of  congestion  owes  its  size  and 
form  to  each  of  the  three  weapons  involved,  viz. :  land, 
capital  and  exchange,  in  varying  proportion.  To  separate 
the  three  accurately  in  each  case  would  perhaps  be  pos- 
sible, with  time;  it  is  certain,  however,  that  it  would  not 
be  profitable,  at  any  rate,  here  and  now.  It  is  needful, 
however,  to  point  out  that  all  three  causes  do  enter,  and 
varyingly.  In  some  cases  congestion  is  due  almost  wholly 
to  the  private  control  of  land-values;  again,  it  is  capitalism 
or  barter-in-exchange  which  visibly  produces  the  pressure. 
If  the  single-taxers  may  say  that  it  is  the  artificially 
high  rents  which  enforce  congestion,  the  socialists  may 
reply  that  it  is  the  diluted  purchasing-power  which  denies 
the  ability  to  pay  the  rents,  however  high  or  low.  If  all 
forms  of  competition  except  that  over  land-values  and 
incomes  were  abolished,  the  average  producer  would  have 
over  twice  the  purchasing-power  with  which  to  pay  the 
high  rents.  If  it  is  the  high  rents  which  cause  the  conges- 
tion, it  is  also  the  congestion  which  causes  the  high  rents. 
Neither  would  be  wholly  right,  nor  wholly  wrong.  The 
display  of  the  evils  of  landlordism  has  been  accomplished 
by  the  single-taxers  with  such  skill  and  fullness,  albeit 
with  some  slight  error,  that  there  is  no  need  to  reproduce 
them  here.  The  evils  of  capitalism  have  been  less  ably 
presented  by  Karl  Marx,  but  they  are  more  obvious. 

It  is  necessary,   however,  to  point  out  that  there  are 


296  THE    COST    OF    COMPETITION 

forms  of  economic  pressure  toward  congestion  and  the 
starvation-wage  in  which  neither  of  these  institutions 
enters  to  more  than  an  insignificant  degree.  Let  us  dis- 
cuss one  fact  worthy  of  consideration :  A  seat  in  the  New 
Yorl<:  Stock-Exchange  is  worth  upwards  of  one  hundred 
thousand  dollars.  Upon  this  totally  unnecessary  invest- 
ment must  the  buyer  of  whatever  is  made  by  any  of  the 
"  industrials  "  handled  therein  help  to  pay  the  interest. 

Why  is  this  as  it  is?  Why  is  It  that  men  slow  enough 
to  pull  out  that  sum  for  an  orphan-asylum  will  be  glad  to 
buy  with  it  entrance  into  that  pandemonium?  It  cannot 
be  ground-rent  which  explains  it;  for  high  as  are  rents  in 
Broad  Street,  they  would  amount  to  comparatively  little 
when  shared  by  each  member  of  the  Exchange.  More- 
over, the  rent,  both  of  land  occupied  and  of  the  improve- 
ments thereon,  is  covered  by  the  current  dues  paid  in,  quite 
independently  of  the  initiation-price.  This  enormous  sum 
is  paid  purely  for  a  privilege,  the  privilege  of  being  on  the 
firing-line  in  the  commercial  warfare  called  competition, 
the  same  privilege  as  that  contended  for  amongst  the  fish- 
ermen on  the  shore  when  a  single  hunter  appeared  offer- 
ing hares  in  trade.  So  profitable  is  the  avocation  of  exact- 
ing profit  by  controlling  exchange  that  this  sum  is  paid 
for  the  mere  privilege  of  attempt  at  it,  with  no  assur- 
ance of  success.  The  burden  placed  upon  the  country  by 
the  presence  of  the  stock  and  produce  exchanges,  with  their 
accessories,  is  grievously  heavy;  but  in  it  the  private  con- 
trol of  land-values  plays  a  part  absolutely  insignificant. 
The  proportion  even  of  capitalism  in  the  evil  is  very  small; 
the  dividends  paid  upon  any  stock  are  very  much  less  than 
the  profits  made  out  of  its  repeated  unnecessary  sale  and 
purchase.    The  burden  is  almost  wholly  one  of  Barter.^^ 

i"^  Incidentally  the  situation  reveals  the  complete  independence  of  barter 
and  exchange.     In  the  handling  of  stocks  and  grain  on  'Change  it  is  not 


The  growth  of  dissipation         297 

Congestion  and  the  Transportation-Problem.    It 

is  finally  to  be  noted  that  the  entire  competitive  institu- 
tion constitutes  a  causative  source  of  congestion.  It  is  not 
to  be  accepted  that  people  live  in  tenement-houses  because 
they  like  tenement-life,  nor  that  they  have  an  office  on 
Park.  Row  and  a  residence  in  Nyack  because  they  like 
daily  cars  and  ferries.  They  live  so  because  a  greater 
population  can  find  support  living  thus,  under  existing 
institutions,  than  is  possible  with  refusal  to  live  so.  There- 
fore the  increasing  population  constantly  coming  into 
existence  through  the  divine  law  of  multiplication  swarms 
into  the  cities  because  it  can  find  support  there  easier  than 
elsewhere.  This  centripetal  tendency  will  be  limited  only 
by  the  inability  to  find  opportunity  for  self-support. 
Therefore  anything  which  makes  it  easier,  literally  or 
figuratively,  for  the  individuals  of  a  vast  population  to  get 
into  touch  with  each  other,  any  improvement  in  horizontal 
transportation  by  rail  or  boat  or  flying-machine,  or  in  ver- 
tical transportation  by  elevator,  or  in  communication,  per- 
mitting two  million  people  to  work  together  as  easily  as 
did  one  million  before,  inevitably  makes  for  cont^estion. 
It  cannot  in  any  wise  be  regarded  as  a  reducer  of  conges- 
tion. When,  for  instance,  the  Brooklyn  Bridge  first  over- 
shadowed the  ferries,  extinction  was  predicted  for  the 
latter;  but  instead,  they  are  now  carrying  greater  crowds 

the  goods  which  change  hands,  and  therefore  increase  in  usefulness,  but 
merely  a  paper  memorandum  of  a  legal  fiction  of  ownership.  It  is  said  that 
each  bushel  of  wheat  passing  from  Chicago  to  New  York  is  bought  and 
sold  some  sixty  to  one  hundred  times.  Here  the  change  of  ownership  has 
not  one  iota  of  the  natural  value  of  exchange,  from  hands  able  to  grow 
more  wheat  than  they  can  eat  to  those  able  to  produce  other  things  but 
needing  wheat  for  food.  Here  exchange  exists,  is  forced  into  artificial, 
burdensome  existence,  solely  for  the  sake  of  attaching  barter- profit  to  it.  So 
much  more  profitable  is  barter  for  the  Acquisition  of  wealth  than  is  ex- 
change for  its  Production,  that  the  latter  has  become  a  mere  puppet  attendant 
upon  the  former. 


298  THE    COST    OF    COMPETITION 

than  ever  before.  When  the  elevated  roads  were  built  the 
surface-roads  revealed  the  working  of  the  same  law.  The 
operation  of  the  new  subway  will  be  to  the  same  end,  to 
accentuate  congestion,  not  only  in  the  terminal  districts, 
but  in  the  traffic  itself,  to  a  point  now  unknown.  There 
is  no  possible  explanation  of  the  congestion  of  the  tall 
office-building,  blotting  out  the  sky  and  making  canons  of 
our  streets,  to  rival  that  of  the  high-speed  hydraulic  ele- 
vator. No  worse  source  of  an  exaggeration  of  that  con- 
gestion could  be  imagined  than  the  invention  of  still  more 
capacious  and  more  highly  speeded  railway-trains,  trolley- 
cars  and  elevators  than  those  we  now  have. 

To  all  those  who  clamor  for  more  cars  in  order  to  re- 
lieve overcrowding,  therefore,  these  considerations  are 
respectfully  dedicated.  They  are  but  instances  of  the 
working  of  the  law  which  has  been  stated  early  and  often 
in  this  analysis:  That  whatever  may  be  the  progress  of 
the  arts  and  sciences,  out  of  each  step  In  advance  the  heart 
of  comfort  to  mankind  is  eaten  and  absorbed  by  a  further 
and  an  entirely  spontaneous  growth  of  that  insidious 
nation-parasite,  Barter. 

Insanity,  Pauperism,  Crime  and  Suicide.     It   has 

already  been  demonstrated  that  the  dissipation  of  eco- 
nomic energy  by  barter,  producing  congestion  and  reduc- 
ing nutrition  to  the  furthest  degree  compatible  with  life, 
and  beyond,  must  reveal  itself  ethically  as  a  perversion  of 
natural  life  Into  violent  outbursts  and  immoral  lesions. 
Just  as,  in  mechanical  energetics,  impact  and  friction  dis- 
sipate motion-energy  Into  heat,  the  "  waste-heap  of  the 
physical  universe,"  so,  in  social  energetics,  competition  dis- 
sipates or  transforms  otherwise  good  social  economic 
energy  Into  disease,  criminality,  insanity,  pauperism  and 
suicide,  the  waste-heaps  of  the  social  world.  Just  as  it  Is 
faulty  design,  and  not  poor  metal,  which  Is  responsible  for 


THE    GROWTH    OF    DISSIPATION  299 

the  occurrence  of  friction  or  impact  in  the  mechanical 
organism,  where  smooth  and  elastic  parallehsm  of  forces 
should  prevail  instead,  so,  in  the  industrial  organism  for 
the  transformation  of  biological  into  the  economic  energy 
of  Value,  it  is  a  faulty  artificial  relationship,  and  not  a 
flaw  in  human  nature,  which  causes  antagonism  to  occur 
where  cooperation  should  prevail  instead. 

Although  this  entire  question  belongs  more  properly  to 
the  ethical  than  to  the  economic  side  of  the  analysis,  and 
is  therefore  discussed  more  fully  in  the  Second  Part,  yet 
it  is  important  to  show  plainly  at  this  point  the  rigid  con- 
nection between  economics  and  ethics.  What  statistical 
light  may  be  thrown  upon  the  situation  may  better  be  dis- 
played here  now,  in  parallel  with  the  other  statistical 
exhibits,  than  later. 

If  economic  degeneration  and  its  ethical  consequences, 
crime,  insanity  and  suicide,  be  truly  an  immediate  function 
of  the  volume  of  Barter  in  the  land,  and  if  the  latter  has 
grown  by  anything  like  the  extent  shown  by  these  preced- 
ing diagrams,  then  it  must  be  expected  that  statistics  should 
reveal  a  marked  growth  in  these  most  undesirable 
phenomena  during  the  last  half-century.  So  soon,  how- 
ever, as  the  statistical  question  is  opened  in  this  connec- 
tion there  arises  a  number  of  subsidiary,  but  important, 
questions  as  to  the  validity  of  the  statistics.  That  many 
of  these  doubts  are  valid  the  author  is  prompt  to  admit; 
but  that  there  is  still  left  some  evidence  of  Indubitable 
worth,  after  their  full  effect  has  been  considered,  he  insists 
with  emphasis. 

Thus,  as  to  growth  of  insauhy,  for  instance,  no  true 
light  is  to  be  had  from  the  statistics  accessible  to  the 
ordinary  inquirer.  The  multiplication  of  the  private  in- 
stitutions for  the  insane  and  the  progress  In  the  care  with 
which  even  the  mildly  Insane  are  now  separated  from  the 


300  THE    COST    OF    COMPETITION 

public  has  been  such  that  the  earlier  records  prove  value- 
less for  comparison  with  the  more  modern  ones.  The 
only  thing  to  be  reported  is  a  general  consensus  of  opinion 
among  the  authorities  that  insanity  is  steadily  on  the  in- 
crease; although  at  what  rate  opinions  differ  widely.  The 
bulk  of  it,  too,  is  now  recognized,  by  the  physicians  in 
charge,  as  to  be  explained  by  nothing  more  mysterious  than 
an  unwholesome  previous  mode  of  life,  sometimes  more 
visible  in  the  parent  than  in  the  patient,  it  is  true,  but  still 
a  natural,  explicable  pathology,  due,  not  to  the  wrath  of 
God,  but  to  the  error  of  man. 

As  to  pauperism  the  records  are  much  more  reliable, 
although  still  unsatisfactory.  They  show  a  practically 
constant  proportion  of  paupers  to  total  population  at  all 
times  since  1850.  If  the  same  statement  might  be  made 
of  the  other  waste-heaps  of  society  than  pauperism,  our 
argument  of  barter-cause  and  degeneration-effect  would 
find  little  comfort  in  statistical  fact.  Taken,  however,  in 
connection  with  the  remarkable  growth  of  crime  and  sui- 
cide, which  is  shortly  to  be  displayed,  this  fact  is  one  of  the 
most  luminous  and  encouraging  of  all  relating  to  this  entire 
question.  It  shows  plainly  that  the  great  and  increasing 
bulk  of  the  life  which  is  squeezed  out  of  shape  by  the 
pressure  from  above  prefers  crime  or  suicide  to  pauperism. 

This  fact  is  to  be  regarded  as  most  encouraging  to  one's 
faith  in  human  nature.  In  the  first  place  is  the  instinctive 
abhorrence  of  the  almshouse  felt  by  all  self-respecting 
people.  The  feeling  is  fundamental  in  human  nature  that 
each  individual  or  family  should  possess  sufficient  energy 
and  wit  for  self-support.  It  is  this  basic  instinct  which  is 
outraged  at  every  turn  by  the  lack  of  good  work  for  all  ap- 
plicants, and  of  effective  return  therefor,  which  is  normal 
to  our  present  industrial  system.  Since  the  artificial  social 
formula  which  we  have  inherited  states  that,  with  a  certain 


THE    GROWTH    OF    DISSIPATION  301 

minor  proportion  of  society  at  all  times,  only  lack  of  work 
and  Christian  starvation  is  accorded  to  him  who  keeps 
within  the  law,  whereas  food,  shelter,  steam-heat  and 
work,  perhaps  with  liberty  and  perhaps  without,  are  ac- 
corded to  him  who  breaks  it,  it  is  most  natural  that  many 
should  choose  the  latter  course  and  break  the  law,  or  one's 
own  life,  rather  than  to  enter  an  almshouse — under  what 
amounts  to  imprisonment  for  life,  with  incidental  disgrace 
as  keen  as  that  of  the  jail.  It  is  no  wonder  that  our 
prisons  are  each  year  increasingly  filled  with  voluntary 
"  rounders,"  while  the  population  of  the  almshouses  re- 
mains stationary. 

In  the  second  place,  as  a  corroborative  fact,  it  seems 
that  the  bulk  of  all  paupers  are  found  to  have  led  a  pre- 
vious life  of  a  sort  peculiarly  productive,  by  purely 
physiological  processes,  of  loss  of  initiative  and  self- 
respect.  They  had  chosen  a  bodily  conduct  of  life  which 
had  sapped  it  of  its  very  foundations.  In  short,  they  were 
there  because  they  had  not  left  enough  vigor  of  life  or  self- 
respect  to  commit  either  crime  or  suicide.  Because  it  does 
take  more  life  to  follow  the  latter  course,  because  the 
population  of  our  prisons  proves  markedly  more  capable 
of  development  into  something  good  than  does  that  of 
our  poorhouses,  because  even  perverted,  distorted  life,  or 
that  put  out  of  the  way  with  decision,  is  better  than  the 
mere  empty  shell  of  it,  it  is  encouraging  to  note  that,  how- 
ever crime  and  suicide  may  be  on  the  increase,  literal  pau- 
perism is  not. 

Finally,  it  is  of  hope  to  note  that  a  thing  so  revolting 
to  the  instinct  of  self-respect  as  material  charity,  whether 
organized  by  the  state  or  not,  bears  not  the  slightest  sign 
of  being  a  commensurate  reply  to  the  growing  needs  of  the 
depressed  classes. 

If  attention  be  turned  next  to  the  history  of  crime,  there 


302  THE    COST    OF    COMPETITION 

again  arises  great  question  as  to  the  proper  interpretation 
of  the  statistics.  The  trouble  is  that  the  records  are  solely 
those  of  prisoners,  whereas  the  legal  definitions  of  just  what 
sorts  of  action  should  place  a  man  in  prison  have  changed 
most  markedly  with  the  years.  It  is  commonly  urged 
that,  although  the  records  do  show  an  increase  In  our 
prison-population,  yet  the  constant  tendency  to  treat  as 
crimes  offenses  which  in  previous  times  were  regarded  as 
too  trival  to  warrant  arrest,  trial  and  imprisonment,  robs 
the  fact  of  its  significance.  This  tendency  undoubtedly 
exists.  Yet  it  is  not  to  be  forgotten  that  while  fresh  addi- 
tions that  are  constantly  being  made  to  the  list  of  deeds  re- 
garded as  criminal,  equally  constant  departure  of  offenses 
from  the  criminal  code  is  occurring,  through  the  repeal  of 
obsolete  laws  and  the  lapse  of  others  into  desuetude.  In 
general,  these  two  opposing  tendencies  may  be  stated  as 
occurring : 

(a)  To  the  multiplication  of  offenses  and  the  severity 
of  the  penalties  for  crimes  against  the  body,  and 

(b)  To  the  opposite  course  in  regard  to  offenses  against 
property.  Thus,  it  is  only  a  few  generations  ago  that  a 
man  might  be  hanged,  according  to  good  old  English  law, 
for  stealing  more  than  a  shilling.  Now  mere  peculation,  to 
almost  any  amount,  unless  constituting  kleptomania,  is  not 
regarded  as  placing  a  man  under  more  than  temporary 
restraint  and  reform,  nor  as  under  extreme  disgrace.  At 
this  same  period  of  the  past,  however,  no  bodily  assault 
was  regarded  as  a  crime  unless  it  accomplished  maiming 
such  as  would  unfit  the  victim  for  fighting — that  being 
then  regarded  as  the  chief  business  of  life.  A  knock- 
down, for  instance,  which  removed  the  defendant's  back- 
teeth  (since  front-teeth  alone  are  of  service  in  a  fight)  and 
left  him  unconscious  for  hours,  could  not  cause  the  perpe- 
trator's   imprisonment    and    so    classify    him    among    the 


THE    GROWTH    OF    DISSIPATION  303 

criminals.  To-day  men  are  fined  and  imprisoned  for  tor- 
turing a  rat ! 

It  is  not  to  be  urged  that  these  tendencies  wholly  coun- 
terbalance one  another.  The  list  of  crimes  is  undoubt- 
edly lengthening.  But  they  do  counterbalance  to  a  degree, 
and  the  balance  is  much  aided  by  another  tendency  of  the 
times  which  is  very  marked,  viz. :  that  toward  shorter  or 
indeterminate  sentences.  All  of  our  records  of  population 
in  prison  are  taken  on  a  certain  day  of  the  year  or  of  the 
decade.  Thus,  it  is  plain,  a  community  in  which  there  had 
been  two  thousand  commitments  during  the  previous  year, 
but  for  a  sentence  averaging  six  months  each,  would 
appear  as  having  exactly  the  same  criminality  as  another 
community  which  had  made  only  one  thousand  commit- 
ments in  the  same  period,  but  for  an  average  sentence  of 
one  year.  It  is  unquestionable  that  the  modern  long  list 
of  minor  offenses  punishable  with  short  or  "  reform  " 
sentences  does  not  necessarily  keep  in  jail  a  greater  average 
number  of  prisoners,  in  proportion  to  a  given  degree  of 
turbulence,  than  in  earlier  times.  There  is  therefore  good 
basis  for  believing  that  our  criminality-statistics  constitute 
rough  and  fairly  satisfactory,  if  not  accurate,  records  of 
the  growth  of  true  civil  recalcitrance. 

These  statistics  reveal  a  steady  increase  in  criminality, 
occurring  not  only  in  all  civilized  lands,  but  most  markedly 
in  those  which  are  regarded  as  leading  all  others  In  the 
progress  of  civilization.  A  most  cursory  examination  of 
the  authorities  upon  penology  develops  the  practically 
unanimous  belief  in  a  continuous  and  rapid  growth  of 
crime,  to  an  alarming  extent.  General  Brinkerhoff,  Presi- 
dent of  the  National  Prison  Congress  of  the  United  States, 
says :  "  The  swell  of  crime  has  been  continuous,  like  a  tide 
that  has  no  ebb."  M.  Augustin  Delvincourt,  in  his  "  La 
Lutte  contre  le   Criminalite  dans  les  Temps  modernes  " 


304  THE    COST    OF    COMPETITION 

(1897),  says:  "When  one  glances  over  the  statistics  of 
crime,  '  that  vast  measure  of  the  conscience  of  the  people,' 
one  cannot  but  be  frightened  at  the  continuous  and  increas- 
ing growth  of  criminality.  Unfortunately,  the  explanation 
is  not  to  be  found  in  the  growth  of  population,  as  would  to 
a  certain  point  appear  to  be  logical,  but  in  the  ever-greater 
number  of  impenitents,  of  revolters  even,  whom  the 
French  law  calls  'repeaters'  {les  recidivist  es) .  The 
growth  Is  such  as  would  deny  belief,  were  It  not  for  the 
force  of  figures  eloquent  in  their  infallibility.  The  gen- 
eral statistics  of  criminal  justice  In  France,  from  185 1  to 
1880,  affirm  that  the  average  annual  number  of  accused 
repeaters  amounts  to  48  per  cent,  and  that  of  the  arrested 
repeaters  to  41  per  cent.  In  i860  it  has  been  shown  that 
during  a  period  of  about  thirty  months,  34  per  cent,  of 
liberated  prisoners  were  again  brought  to  justice;  in  1876 
this  proportion  had  increased  to  40  per  cent,  and  In  1878 
to  45  per  cent. ;  in  later  years  the  figures  are  greater.  The 
total  number  of  sentenced  repeaters,  In  the  courts  of  assizes 
and  correction,  which  was  in  1885,  91,332,  in  1888  had 
risen  to  95,871,  an  increase  of  7.5  per  cent,  in  that  short 
time;  In  1892  the  number  had  become  143,784.""  He 
also  quotes  figures  showing  that  in  Italy,  In  six  years,  the 
criminals  per  hundred  thousand  Inhabitants  rose  from 
1070  to  1550.  In  Germany,  in  five  years,  the  total  num- 
ber rose  from  350,000  to  430,000. 

Mr.  W.  D.  Morrison,  of  Wandsworth  Prison,  Eng- 
land, in  his  "  Crime  and  its  Causes,"  says:  "  Most  of  the 
principal  authorities  In  Europe  and  America  are  emphati- 
cally of  opinion  that  crime  Is  on  the  increase.  In  the 
United  States  we  are  told  by  Mr.  D.  A.  Wells  (in  his 
'  Recent    Economic    Changes'  )    and    by    Mr.    Howard 

14  This  is  an  increase  of  57 i   per  cent,  in  seven  years.     Compare  with 
Fig.  21   for  the  same  years. 


THE    GROWTH    OF    DISSIPATION  305 

Wires,  an  eminent  specialist  in  criminal  matters,  that  crime 
is  steadily  increasing,  and  it  is  increasing  faster  than  the 
population.  Nearly  all  the  chief  statisticians  abroad  tell 
the  same  tale  with  respect  to  the  growth  of  crime  upon  the 
Continent.  Dr.  Mischler,  of  Vienna,  and  Professor  von 
Liszt,  of  Marburg,  draw  a  deplorable  picture  of  the  in- 
crease of  crime  in  Germany.  Professor  von  Liszt  ^''  says 
that  fifteen  million  persons  have  been  convicted  by  the 
German  criminal  courts  within  the  last  ten  years;  and,  ac- 
cording to  him,  the  outlook  for  the  future  is  somber  to  the 
last  degree.  In  France  the  criminal  problem  is  just  as 
formidable  and  perplexing  as  it  is  in  Germany.  M.  Henri 
Joly  estimates  that  crime  has  increased  in  the  former  coun- 
try 133  P^^  c£"t.  within  the  past  half  century,  and  is  still 
steadily  rising."  He  then  proceeds  to  enter  empirically 
the  question  as  to  the  possible  connection  between  economic 
conditions  and  criminality.  He  observes,  in  the  first  place, 
that  it  is  those  countries  which  lead  all  others  in  the  pro- 
duction of  wealth,  in  commercialism,  which  experience 
the  most  crime.  "  The  wealth  of  England  is  perhaps 
six  times  the  wealth  of  Italy;  but,  notwithstanding  this 
fact,  more  thefts  are  annually  committed  in  England  than 
in  Italy.  The  wealth  of  France  is  extremely  superior 
to  the  wealth  of  Ireland,  both  in  quantity  and  in  distribu- 
tion, but  the  population  of  France  commits  more  offenses 
against  property  than  the  Irish.  Spain  is  one  of  the  poor- 
est countries  in  Europe;  Scotland  is  one  of  the  richest; 
but,  side  by  side  with  this  inequality  of  wealth,  we  see  that 
the  Scotch  commit,  per  hundred  thousand  of  population, 
almost  four  times  as  many  thefts  as  the  Spaniards."  He 
concludes  broadly  from  these  facts  that  poverty  is  not  a 
cause  of  crime;  but  in  this  his  conclusions  are  broader  than 
his  facts.      For,  if  poverty  as  it  is  commonly  understood, 

15  Zeitschrift  fiir  die  gesamte  Stiafiechtswissenschaft,  ix.,  472. 


3o6  THE    COST    OF    COMPETITION 

viz. :  as  a  lack  of  material  supplies  for  life,  is  a  preventive 
of  crime,  crime  should  have  decreased  everywhere  during 
the  century,  for  then  the  world  grew  immensely  richer;  but 
this  his  own  facts  disprove.  If  poverty  be  redefined,  how- 
ever, as  meaning  a  comparative,  rather  than  an  absolute, 
lack  of  worldly  things,  as  meaning  disparity  of  wealth, 
then  the  situation  becomes  clear;  for  it  is  then  the  richest 
countries  which  contain  the  most,  and  the  most  intense, 
poverty.  It  is  also  the  richest  countries,  and  those  most 
active  commercially,  w^hich  possess  the  most  crime. 

To  bring  out  this  fact  compare  such  countries  as  Spain, 
Italy,  Turkey  and  the  Balkan  peninsula,  on  the  one  hand, 
with  such  countries  as  Germany,  England,  the  United 
States,  Australia,  etc.,  on  the  other.  The  former  possess 
much  the  more  turbulent  and  violent  population,  impatient 
of  all  restraint,  and  yet  suffering  from  the  obvious  lack  of 
productive  activity  within  their  land.  The  latter  are  not 
only  the  most  enlightened  countries  of  the  world,  fairly 
worshiping  the  words  peace  and  arbitration,  built  upon 
democratic  principles,  but  they  are  the  most  phenomenally 
active  in  the  production  of  wealth.  According  to  all 
superficial  reasoning,  the  former  countries  would  be  those 
where  robbery  was  the  rule  of  life  and  the  latter  would 
be  those  where  property-rights  would  be  held  as  sacred. 
As  a  matter  of  fact,  in  the  former  countries  it  is  common, 
in  the  country-districts,  to  find  locks  on  the  doors  dispensed 
with  entirely,  and  even  in  the  cities  crime  against  property 
is  quite  less  than  in  the  latter  countries.  For  there,  indeed, 
one's  property  is  commonly  stolen  from  the  aged  and  the 
helpless  even  when  locked  up  in  a  bank  vault;  the  robber 
had  perhaps  blown  the  safe,  perhaps  he  had  absconded, 
or  perhaps  he  had  merely  *'  beared  "  some  securities  In 
Wall  street. 

Mr.   Morrison   also  reviews  the  question  of  crime  In 


THE    GROWTH    OF    DISSIPATION  307 

America  In  terms  of  native  or  foreign  origin  of  population. 
He  concludes,  as  has  every  other  Investigator  whom  I  have 
consulted,  that  the  foreign-born  are  less  criminal  than  the 
American-born.  For  the  popular  belief  In  the  "  hordes 
of  undesirable  immigrants "  as  the  explanation  of  our 
national  criminal  record  there  is  absolutely  no  adequate 
foundation. 

Dr.  A.  C.  Hall,  In  his  "  Crime  In  its  Relations  to  Social 
Progress"  (1902),  an  exhaustive  thesis  from  the  statis- 
tical standpoint,  quotes  figures  (page  282  and  following) 
to  show  that  crime  has  Increased  in  England  and  Wales, 
in  France,  in  Austria  and  in  Italy,  during  the  latter  portion 
of  the  century  recently  closed,  by  various  startling  per- 
centages. On  page  316  he  says:  "The  German  sta- 
tistics show  far  more  crime  In  the  city  than  In  the 
country."  He  points  out  near  by  that  the  number  of 
young  people  between  the  ages  of  twelve  and  eighteen 
employed  In  factories,  per  ten  thousand,  has  Increased  from 
51  In  1885  to  66  in  1895.  On  page  329  he  says: 
"  Crime  Is  essentially  a  social  product,  increasing  with 
growth  in  knowledge,  intelligence  and  social  morality, 
along  lines  of  greatest  resistance  to  the  new  forces  and 
forms  of  this  social  life."  The  Italics  are  my  own,  In- 
serted because  he  mentioned  every  chief  characteristic  of 
modern  growth  In  civilization  except  that  of  the  competi- 
tive system  for  the  determination  of  price. 

Mr.  Roland  P.  Falkner,  In  his  "  Crime  and  the  Cen- 
sus," ^^  takes  up  the  argument  that  the  criminal  statistics 
do  not  tell  the  truth  as  to  affairs,  making  them  appear  to 
be  worse  than  they  are.  He  corrects  the  totals  by  deduct- 
ing first  for  the  "  houses  of  correction  "  and  secondly  for 
the  Southern  States,  in  order  to  bring  all  to  a  homogeneous 

^^  American    Academy    of    Political    and    Social    Science    publications, 
No.  190. 


3o8  THE    COST    OF    COMPETITION 

basis.  Final  exclusion  of  prisoners  not  under  sentence 
(although  the  proportion  of  them  presumably  guilty  might 
be  expected  to  remain  constant)  brings  the  growth  of 
crime  per  unit  of  population  between  1 880  and  1 890  down 
to  10.5  per  cent.  If  this  be  the  best  that  can  be  done  by 
arguments  in  this  direction,  to  prove  that  our  proportion 
of  criminality  has  been   increasing   at  the   rate   of  only 


Fig.  21.  The  Growth  of  Homicide  and  Hanging:     Chicago  Tri- 
bune's Statistics 


slightly  over  10  per  cent,  per  decade,  the  situation  is  bad 
enough  to  warrant  the  sober  attention  of  the  best  patriot- 
ism which  we  have  to  offer. 

Governor  Henry  M.  Boies,  in  his  *'  Science  of  Pen- 
ology," gives  countenance  to  a  table  of  the  growth  of  the 
country's  homicides,  hangings  and  lynchings  for  each  of 
the  years  from  1882  to  1900,  inclusive,  as  culled  from  the 
daily  press-reports  by  the  Chicago  Tribune.  The  results  are 


THE    GROWTH    OF    DISSIPATION  309 

displayed  in  Fig.  21.  There  the  curve  CCC  gives  the 
variation  in  number  of  homicides,  the  curve  HHH  the 
number  of  hangings  and  the  line  PP  the  contemporary 
growth  of  population.  The  row  of  points  LL  gives  the 
number  of  lynchings,  which  is  almost  constant  in  compari- 
son with  the  enormous  growth  of  the  general  volume  of 
fatal  violence  of  other  sorts  which  is  commonly  over- 
looked. Here  the  contrast  between  the  prosperous  period 
of  the  middle  eighties,  when  It  was  comparatively  easy  to 
obtain  continuous  employment,  with  the  gradually  ap- 
proaching period  of  economic  depression  which  culminated 
in  the  panic  of  1893  ^"^  departed  only  with  the  opening 
of  the  Spanish  War,  Is  too  marked  to  permit  escape  from 
the  impression  that  bodily  violence  Is  a  symptom  of  eco- 
nomic pressure.  The  growth  Is  sevenfold.  No  minor 
error  In  the  data,  nor  any  smaller  cause  than  this  national 
one,  can  possibly  be  adequate  to  Its  explanation." 

17  "  'Yht  newspapers  are  now  giving  considerable  space  to  the  increase 
of  crime  in  the  large  cities  of  the  United  States  during  the  last  few  months," 
says  the  Literary  Digest  (September,  1904).  "Chicago  has  been  attract- 
ing attention  by  its  daily  chronicle  of  crime,  and  now  New  York  is 
wrought  up  over  an  epidemic  of  murders,  robberies,  and  hold-ups.  Missis- 
sippi also  comes  forward  with  a  murder  record  which,  the  Chicago 
Record-Herald  says,  '  indicates  that  life  is  about  twice  as  safe  in 
southern  Italy  as  in  that  State.'  '  The  violence  and  indifference  to 
violence  shown  by  our  great  cities,  Chicago  included,'  says  The  Record- 
Herald,  '  are  symptomatic  of  a  great  and  rapid  change  that  is  passing 
over  the  country.  If  the  "  Anglo-Saxon  "  respect  for  law  and  order  is 
leaving  us,  it  is  high  time  to  start  a  revival  of  it.'  There  have  been  24 
murders,  68  robberies,  57  felonious  assaults,  and  253  burglaries  in  New 
York  City  within  one  month.  Accounts  of  hold-ups  and  robberies  have 
also  become  a  conspicuous  feature  of  the  Chicago  dailies.  In  Mississippi 
there  were  569  known  murders  committed  during  the  eight  months  ending 
September  r,  chiefly  among  the  lower  classes  and  negroes.'  "  Mr.  Taft, 
Secretary  of  War,  In  his  address  before  the  Yale  Law  School  (1905) 
quotes  these   figures   in   evidence   of  the   recent  growth  of  crime: 

1885.       1904. 

Murders      1,808       8,482 

Executions    io3  116 


3IO  THE    COST    OF    COMPETITION 

In  the  light  of  all  this  evidence  as  to  a  worldwide  rapid 
increase  of  violence  within  recent  years,  the  records  of  our 
own  national  census  may  be  reviewed  with  some  confidence, 
even  if  they  do  paint  a  picture  which  is  so  black  as  to  cause 
suspicion.  Because,  however,  of  the  admitted  tendency 
of  the  evolution  of  common  law  to  reduce  the  number  of 
prisoners  on  hand  for  a  given  degree  of  turbulence,  and 
waiving,  for  the  time,  all  right  to  claim  that  a  decided 
diminution  in  the  prison-population  is  the  only  thing  which 
a  civilized  people  has  a  right  to  expect,  the  plan  has  been 
adopted,  in  our  quotation  of  these  records,  to  assume  that 
the  criminality  of  1850  was  just  twice  what  the  records 
reveal,  as  measured  in  present  standards.  That  is,  we 
have  increased  the  record  of  crime  for  that  year  by  100 
per  cent.,  that  of  i860  by  80  per  cent.,  that  of  1870  by  60 
per  cent.,  that  of  1880  by  40  per  cent.,  and  that  of  1890 
by  20  per  cent.  That  of  1900  remains  yet  to  be  inserted, 
in  its  true  value,  but  at  the  time  of  writing  had  not  yet  be- 
come accessible. 

In  exhibiting  the  national  statistics  for  suicide  there  has 
seemed  to  be  no  reason  for  so  distorting  the  figures.  The 
reports  of  deaths  and  their  causes  are  so  carefully  and 
accurately  made,  and  always  have  been,  that  the  most  re- 
fined conscience  could  not  demand  any  arbitrary  coefficient 
of  correction  in  terms  of  time.  The  same  thing  is  true  of 
deaths  from  all  other  causes.  Of  these  the  deaths  due  to 
heart-failure  seemed  to  have  a  direct  bearing  upon  the 
case,  while  those  due  to  pneumonia  possess  an  indirect  one. 

His  moral  drawn  from  the  stationary  figures  for  executions — greater 
certainty  and  promptness  of  conviction — is  excellent.  So  are  the  calls  for 
the  reform  and  expansion  of  police-forces  in  all  the  larger  cities.  But 
these  remedies  are  all  in  the  nature  of  partial  cures  or  alleviations,  not 
of  preventives.  The  great  lesson  taught  by  the  statistics  is  that  the  cause 
of  all  violence,  whatever  it  may  be,  has  expanded  egregiously.  That  being 
90  all  cures  come  too  late. 


THE    GROWTH    OF    DISSIPATION 


311 


In  Fig.  22,  therefore,  has  been  exhibited  the  parallel- 
ism between  the  growth  of  competitive  economic  dissipa- 
tion, on  the  one  hand,  and  the  growth  of  crime,  suicide, 
heart-failure  and  pneumonia  as  revealed  by  the  death- 
reports,  on  the  other.     There  has  already  been   found 


Fi}^.  22.     The  Parallel  Growth  of  Economic  Dissipation,  Crime, 
Pneumonia,    Heart-disease  and   Suicide 

ample  basis  for  regarding  the  former  as  a  cause  of  evil; 
there  Is  similar  basis  for  expecting  these  latter  phenomena 
to  be  the  sorts  of  evil  which  would  be  Its  fruit. 

In  Fig.  22,  the  curve  AAA  Is  that  of  Fig.  15  modified 


312  THE    COST    OF    COMPETITION 

in  scale  to  fit  the  present  diagram.  The  curv^e  DDD 
measures  the  proportion  of  the  solid  black  of  Fig.  12  to  the 
clear  white.  These  two  dotted  curves  offer,  therefore, 
our  best  available  measures  of  the  certain  growth  of  eco- 
nomic dissipation  by  barter  in  proportion  to  the  general 
mass  of  productive  activity.  Although  drawn  from  quite 
different  sources  and  based  upon  quite  different  assump- 
tions, it  is  seen  that  they  agree  very  closely — particularly 
since  the  absolute  scale  of  altitudes  means  nothing  in  this 
diagram;  it  is  the  relative  increase  which  tells  the  whole 
story. 

Generally  parallel  with  these  dotted  curves  are  four 
full-line  curves.  The  curve  CCC  shows  the  growth  of 
crime  in  the  United  States  since  1850,  upon  the  assump- 
tion that  the  actual  growth  has  been  at  only  one-half  the 
rate  of  that  revealed  by  the  census-statistics. 

The  curve  SSS  exhibits  the  growth  of  suicide  in  the 
same  time,  in  proportion  to  a  fixed  number  of  deaths  from 
all  other  causes.  That  is  to  say,  not  only  has  the  death- 
rate  from  all  causes  for  the  entire  nation  remained  almost 
constant  during  these  five  decades,  but  even  what  slight 
variations  In  It  have  actually  occurred  are  here  eliminated 
from  the  showing.  This  curve  shows  the  increasing 
chance  which  a  man  runs,  when  his  life-span  shall  have 
finally  run  out,  of  dying  from  suicide  rather  than  from  any 
other  cause. ^^ 

Similarly,  the  curve  HHH  shows  the  increasing  pro- 
portion of  deaths  due  to  heart-failure,  the  one  disease 
most  likely  to  reveal  promptly  any  Increase  in  Intensity  of 

18  The  growth  of  suicide  in  England,  although  not  so  rapid  as  in 
America,  as  might  be  expected  from  the  less  rapid  and  intense  growth  of 
commercialism  there,  is,  nevertheless,  steady  and  alarmingly  rapid.  During 
the  four  decades  following  i860  it  grew  to  108,  131,  177  and  218  per  cent, 
of  what  it  had  been,  respectively,  whereas  in  the  United  States  it  grew  to 
no,  159,  198  and  230  per  cent.,  respectively. 


THE    GROWTH    OF    DISSIPATION  313 

competiton.  That  is  to  say,  the  effect  of  increased  com- 
petitive pressure  would  reveal  itself  among  the  losers  in 
the  increased  number  of  suicides,  while  among  the  win- 
ners it  would  bring  about  an  increased  death-rate  from 
heart-failure  upon  the  competitive  battle-field,  with  the 
bequest  of  successful  colors  to  posterity  as  the  only 
consolation.^^ 

One  of  the  few  diseases  which  is  sufficiently  general  to 
make  its  statistics  significant  and  safe,  and  at  the  same 
time  sufficiently  dependent  upon  good  shelter,  good  food 
and  moderate  exertion  to  make  it  an  indirect  index  of  the 
fruits  of  competition,  is  pneumonia.  The  curve  PPP  of 
Fig.  22  shows  its  growth  in  proportion  to  all  other  dis- 
eases during  the  same  five  decades,  a  growth  of  about 
threefold.  This  is  not  so  bad  as  the  nearly  fourfold 
growth  of  suicide,  nor  anything  like  the  almost  sevenfold 
growth  of  heart-failure,  but  it  is  bad  enough.  When  it 
is  recalled  that  the  usual  fluctuations  in  the  various  causes 
of  disease  seldom  are  revealed  by  a  fluctuation  in  the  death- 
rate  of  more  than  a  few  per  cent., — the  recent  epidemic  of 
spotted  fever,  for  instance,  not  being  even  visible  therein — 
it  is  evident  that  some  pretty  stalwart  force,  of  national 
proportions,  must  be  invoked  in  order  to  explain  these 
growths  in  special  death-rates  of  three,  four  and  seven 
hundred  per  cent. 

19  The  New  York  daily  press  for  June  14,  1905,  contains  the  follow- 
ing: "An  alarming  increase  in  deaths  from  heart-disease  presented  by 
last  week's  mortuary  statement  has  led  to  a  comparison  of  data,  which 
shows  that  since  i868  the  annual  death-rate  here  from  heart-failure  and 
Bright's  disease  has  grown  from  13.05  to  29.62  per  10,000  population. 
This  increase  is  considered  alarming  by  authorities  on  the  subject,  and 
is  emphasized  by  the  fact  that  125  persons  died  last  week  from  organic 
heart-disease,  when  the  rate  the  corresponding  week  in  1904  was  only  56. 

"  Strain  of  business  and  the  cares  attendant  on  fierce  competition  in  the 
financial  center  of  the  city,  and  the  worry  attendant  upon  the  anxiety 
to  gain  wealth,  are  given  as  an  explanation  by  physicians.  To  put  their 
explanation  briefly,  they  declare  the  figures  now  prove  beyond  doubt  that 
residents  of  New   York  are   leading  too   rapid   lives.     Some  of  them  say 


314  THE    COST    OF    COMPETITION 

It  might  naturally  be  expected  that  tuberculosis,  so  sensi- 
tive to  overwork  and  malnutrition,  would  be  the  one  best 
possible  index  of  the  growth  of  economic  pressure.  So  it 
would  be  had  it  been  left  alone.  But  tuberculosis  stands 
almost  at  the  head  of  all  diseases  as  to  its  absolute  death- 
rate.  It  claims  an  enormous  list  of  victims  each  year. 
On  the  other  hand,  it  is  especially  open  to  prevention. 
The  causes  and  manner  of  its  contagion  are  thoroughly 
understood  by  the  medical  profession.  Therefore,  it  has 
been  possible  and  most  desirable  to  alleviate  it.  For 
decades  the  physicians  and  the  government  have  labored 
toward  its  extinction,  with  all  manner  of  means  aimed 
particularly  at  it.  No  other  disease  has  had  anything 
like  the  attention  paid  to  it  as  has  tuberculosis,  excepting 
possibly  small-pox.  The  fruits  of  this  are  seen  in  the 
statistics.  From  1850  to  1870  the  proportion  of  deaths 
due  to  this  cause  rose  by  37  per  cent.  During  the  thirty 
years  which  followed,  by  1900,  this  proportion  had  fallen 
almost  to  where  it  was  in  1850.  In  other  words,  all  that 
the  combined  skill,  energy  and  devotion  of  the  medical 
profession,  the  boards  of  health  and  the  state  governments 
have  been  able  to  do,  with  all  their  special  hospitals, 
improved  public  water-supplies  and  sanitation,  domestic 
inspection  and  education  of  public  opinion,  has  been  to 

one  person  In  a  hundred  examined  has  organic  heart-trouble,  and  the  other 
99  stomach-affections,  the  latter  being  due  to  rapid  eating." 

The  rate  of  increase  of  death  from  heart-disease  in  New  York  and 
Brooklyn,  per  thousand  deaths  from  all  causes,  during  the  decade  of 
1880-90  was  twenty  per  cent.  During  the  decade  of  1890-1900  it  rose 
by  thirty-six  per  cent.  more.  Since  1900  the  growth  has  apparently  con- 
tinued  at   a   still   more   alarming   rate. 

The  Cliicafio  Tribune,  which  keeps  careful  records  of  many  classes  of 
abnormal  happenings,  calls  attention  to  the  increasing  frequency  of  suicides 
of  young  persons.  Suicides  in  general  are  increasing  in  the  country  at 
an  extraordinary  rate.  In  1902,  it  says,  the  suicides  of  women  were  three 
times  as  many  as  in  1901,  and  the  ratio  of  increase  continues.  Its  list  of 
current  suicides  of  young  persons  between  ten  and  twenty  years  of  age  is 
harrowing. 


THE    GROWTH    OF    DISSUVVnOM  315 

reduce  the  death-rate  from  tuberculosis  not  quite  to  the 
position  which  it  held  under  the  primitive  conditions  exist- 
ing in  1850.  Their  strenuous  efforts  for  good  have  been 
able  to  not  quite  counterbalance  the  evil  tendencies  of  the 
competitive  system  in  this  direction. 

If,  in  the  lack  of  figures  as  to  the  proportion  of  criminal 
life  in  the  community  from  the  census  of  1900,  an  estimate 
were  cast  for  that  year  from  the  general  form  and  trend 
of  the  curve  CC  of  Fig.  21,  it  is  plain  that  the  curve  CCC 
of  Fig.  22  must  again  cross  the  curve  SSS  during  the 
decade  of  1 890-1900  and  end  at  some  point  nearer  to  A 
than  to  S.  However  that  may  be,  the  remarkable  coin- 
cidence in  general  rate  of  increase,  during  an  entire  half- 
century,  of  the  volume  of  commercial  competition  and 
economic  dissipation  of  Value  on  the  one  hand,  and  of  the 
amount  of  crime  and  suicide  on  the  other,  is  exceedingly 
impressive.  Taken  by  itself  it  would  constitute  to  the 
dullest  mind  a  plain  hint  as  to  where  to  look  for  the  ex- 
planation and  cure  of  criminality.  Taken  in  connection 
with  our  previous  deductive  analysis  of  general  principles, 
based  upon  the  law  of  the  conservation  of  energy,  to  the 
conclusion  that  a  state  of  affairs  just  such  as  is  here  revealed 
must  naturally  be  expected  to  exist,  there  seems  to  be  no 
possible  escape  from  the  conviction  that  criminality  and 
suicide  are  very  largely,  if  not  wholly,  the  fruit  of  com- 
mercial competition:  of  an  abstract,  artificial  institution 
as  alterable  by  man  as  are  any  of  his  institutions,  by  educa- 
tion, argument  and  agreement,  and  not  at  all  the  fruit 
of  Individual  moral  degeneracy  throughout  the  race. 


XI 
SUPPLY   AND    DEMAND 

UP  to  this  point  all  deductions  have  been  based  upon 
fundamental  considerations  affecting  society  as  a 
whole.  This  is  justified  as  the  only  method  of 
procedure  in  any  scientific  investigation  sure  not  to  lead 
one  astray.  With  the  conclusions  thus  based,  no  consid- 
eration of  details  may  raise  a  question;  if  the  details  appear 
to  conflict  therewith,  it  is  certain  sign  that  there  is  error 
either  in  their  definition  or  their  observation.  In  order, 
however,  to  furnish  to  the  technical  reader  a  further  in- 
sight into  the  operation  of  the  fundamental  energies 
referred  to  above,  and  to  attain  some  accurate  ground  for 
future  prediction,  excursion  will  be  made  into  the  details 
of  economic  science  to  the  extent  of  studying  the  action 
of  supply  and  demand.  For  the  non-technical  reader,  this 
matter  is  the  best  in  the  book  for  skipping;  but  if  treated 
in  this  way  some  later  deductions  which  are  based  upon 
it  must  not  be  questioned. 

The  multitude  of  minor  economic  phenomena  which  are 
included  broadly  by  these  terms,  Supply  and  Demand, 
together  constitute  the  detailed  action  of  the  horizontal 
current  of  circulation  portrayed  in  Fig.  8.  The  starting- 
point  of  the  cycle  of  energy-transformations  making  up 
that  current  is  usually  taken  to  be  Demand,  the  demand  of 
the  ultimate  consumer.  In  the  purely  economic  sense,  de- 
mand is  the  sole  director  of  all  industry;  although  it  is 
not,  as  is  often  stated,  the  sole  instigator  to  productive 

31C 


SUPPLY   AND    DEMAND  3^^ 

effort.  By  starting  with  demand  as  a  known  quantity  and 
working  from  it  backward  to  the  forces  by  which  wealth 
of  various  sorts  has  been  prepared  for  its  gratification,  a 
rational  understanding  may  be  had  of  the  forces  by  which 
we  see  directed  the  detailed  activities  of  daily  industry. 

All  phenomena  occurring  in  the  processes  of  supply  and 
demand  must  be  measured  in  valuation.  The  funda- 
mental field  of  social  energetics,  in  which  human  life  and 
its  economic  equivalent,  Value,  were  the  elementary  quan- 
tities from  which  alone  safe  deduction  might  be  made,  is 
now  disposed  of.  We  are  now  considering,  in  the  equa- 
tion of  supply  and  demand,  the  transmission  of  those 
energies  throughout  the  body  economic;  and,  as  was 
pointed  out  on  page  153,  they  must  be  translated  into  valu- 
ation before  that  transmission  is  possible.  The  quantity 
of  valuation  attached  to  any  commodity  during  this  trans- 
mission is  known  as  Its  price^  a  term  more  fully  defined  on 
page  73.  It  Is  the  medium  of  communication  whereby 
different  portions  of  the  body  economic  get  into  touch  with 
each  other. 

Elementary  Economic  Interaction.  The  produc- 
tion by  an  individual.  In  obedience  to  his  own  desires,  of 
wealth  for  his  own  consumption  Is  not  an  economic  or 
social  phenomenon;  it  Is  a  biologic  one.  On  the  other 
hand,  so  soon  as  two  or  more  individuals  take  part  In  the 
transaction  there  arises  a  question  of  the  relation  between 
Individuals.  Such  a  relation  between  two  individuals  Is 
the  simplest  possible  element  of  economic  society  and  gives 
rise  to  the  elementary  economic  phenomenon:  Exchange. 

Elementary  Economic  Force.  In  the  days  before 
exchange  existed,  when  each  man  supplied  by  his  own 
labor  all  of  his  own  and  his  family's  needs,  the  stimulus 
to  productive  effort  would  have  consisted  of  desire,  an  In- 


3i8  THE    COST   OF   COMPETITION 

tangible,  psychologic  factor  which  has  hitherto  defied  exact 
measurement.  But  with  the  advent  of  exchange,  which  is 
the  primordial  economic  phenomenon,  the  primordial  eco- 
nomic force  became  tangible  and  measurable,  and  is  now 
known  as  Price. 

Thus,  to  illustrate,  the  stimulus  offered  to  the  activities 
of  the  prehistoric  fisherman  by  his  hunger  for  fish  was  a 
practically  immeasurable  thing,  modern  discoveries  in 
psychometry  notwithstanding.  Nor  could  the  desire  be 
measured  by  the  resultant  activity,  because  a  lazy  man  must 
feel  much  more  hunger  than  an  energetic  one  before  the 
same  activity  would  become  visible.  Still  less  did  the 
quantity  of  fish  caught  and  eaten  measure  the  hunger,  be- 
cause the  skill  and  luck  of  the  fisherman  here  enter  as  addi- 
tional unknown  factors.  But  the  stimulus  offered  to  the 
fisherman's  activities  by  a  hunter's  hunger  for  fish,  desired 
as  a  variation  from  his  ordinary  diet  of  game,  is  no  longer 
measurable  by  the  hunter's  hunger,  nor  by  the  fisherman's 
energy,  skill  or  avarice,  but  by  the  amount  of  game  rela- 
tively to  fish  upon  which  they  can  agree  to  base  an  ex- 
change. This  ratio,  or  price,  no  longer  depends  upon  any 
attempt  at  or  necessity  for  absolute  determination  or  ex- 
pression of  the  psychic  forces  upon  either  side.  It  Is 
merely  an  equation  between  the  two,  a  purely  relative 
thing.  Like  a  mathematical  equation,  it  may  have  one,  a 
dozen,  an  infinite  or  an  unknown  number  of  roots;  all  of 
the  values  upon  either  side  may  be  unknown;  yet,  entirely 
regardless  of  this  fact,  if  the  equation  be  true,  upon  it  may 
be  built  the  most  complex  and  valuable  deductions.  As 
a  matter  of  fact,  upon  it  is  based  all  modern  commerce, 
although  the  absolute  value  of  the  many  forces  relatively 
equated  therein, — the  absolute  psychic  desire,  need  or  pain 
back  of  any  economic  negotiation, — is  to-day,  and  may 
ever  remain,  wholly  unknown  and  immeasurable  quantities. 


SUPPLY    AND    DEMAND  319 

The  Two  Dimensions  of  Economic  Energy,  rhe 
equation  resultant  from  such  negotiation,  or  price,  is  the 
primordial  economic  force.  But  force  is  not  of  itself  a 
measure  of  energy.  The  factor  of  extent  of  energy  must 
also  appear.^  The  extent  of  economic  energy  is  evidenced 
by  the  amount  of  commodities  which  can  be  influenced  at 
the  price  prevalent.  But  this  amount  is  not  visible  in  the 
price  alone,  nor  has  price  any  essential  connection  with  it. 
In  any  given  limited  market  there  is,  of  course,  a  relation 
between  price  and  quantity  of  exchange.  But  until  the 
market  is  defined  knowledge  as  to  price  gives  no  idea  as  to 
quantity.  Thus,  a  very  low  price  offered  for  wheat  might 
easily  influence  a  larger  exchange  in  Chicago  than  a  very 
much  higher  price  would  do  in  Athens;  not  necessarily 
because  higher  prices  rule  in  Athens,  but  because  Chicago 
Is  the  center  of  a  very  much  larger  wheat-producing  and 
wheat-purchasing  population. 

The  extent  of  the  economic  energy  of  any  given  market 
cannot  be  known  so  long  as  the  energy  of  supply  or  demand 
remains  latent  or  potential  in  character.  It  must  find 
kinetic  expression  in  exchange  before  it  becomes  visible 
and  measurable.  Then  the  extent  of  the  economic  energy 
involved  is  revealed  In  the  amount  of  commodities  ex- 
changed under  the  Influence  of  -the  price  offered  and 
accepted.  The  multiplication  of  price  by  the  amount  of 
goods  exchanged  can  alone  give  a  measure  of  the  quantity 
of  business  done,  or,  in  other  words,  of  the  economic 
energy  released.  In  scientific  language,  the  total  inte- 
grated dynamic  effect  of  price  active  In  exchange  of  com- 
modities,  as   contrasted  with  price   passive   in   a  market 

1  For  an  elaboration  of  the  ideas  of  intensity  and  extent  of  energy,  see  the 
author's  "Thermodynamics  of  Heat-engines,"  Chapter  I.  He  plans  to 
publish  shortly  an  improved  and  extended  statement  of  the  idea,  as  being 
one  of   the   fundamentals   of   all   the   natural   sciences. 


320  THE    COST    OF    COMPETITION 

where  no  trading  takes  place,  is  known  as  Demand,  or 
Purchasing-Power. 

To  summarize  and  define :  Economic  Energy  exists  in 
two  forms,  as  do  all  other  sorts  of  energy,  viz. :  Potential 
and  kinetic. 

The  potential  or  latent  form  of  economic  energy  is 
demand,  or  purchasing-power.  It  is  definable  as  a  form 
of  energy,  because  it  possesses  the  power  of  overcoming 
resistance — the  resistance  to  production  or  exchange.  It 
must  be  a  potential  form  of  economic  energy,  because  it  is 
completely  latent  and  imperceptible  to  the  social  sense  ex- 
cept when  and  as  it  converts  itself  into  its  corresponding 
kinetic  form  of  social  economic  energy,  exchange.  More- 
over, it  can  be  stored  indefinitely,  as  to  time. 

Correspondingly,  the  kinetic  form  of  economic  energy 
is  Exchange,  or  supply  and  demand  become  visibly  active 
in  an  equalization  of  price-pressure. 

Economic  energy,  like  all  other  forms  of  energy,  is 
made  up  of  two  factors,  its  intensity  and  its  extent.  The 
factor  of  intensity  is  price.  The  factor  of  extent  is  the 
quantity  of  goods  handled. 

It  is  plain  that  price  is  the  factor  of  intensity,  for  the 
transformation  of  demand  from  potential  to  kinetic,  from 
demand  latent  in  a  non-purchasing  population  to  demand 
active  in  exchange,  always  occurs  when  there  is  present  a 
favorable  difference  in  price,  and  never  when  there  is  an 
unfavorable  one.  Exchange  never  takes  place  when  the 
buyer's  price  is  lower  than  the  seller's.^ 

It  is  plain  that  goods  constitute  the  factor  of  extent,  for 

2  Nor  even  when  they  are  exactly  equal.  Of  course,  the  visible  price  of 
exchange  is  always  the  same  for  both  parties.  But  before  exchange  can 
take  place  the  buyer's  real  price — that  is,  the  maximum  price  which  he  is 
willing  to  pay — must  be  at  least  somewhat  higher  than  the  visible  price;  the 
seller's  must  similarly  be  slightly  lower.  Neither  party  reveals  his  real 
price,  but  it  is  there,  nevertheless. 


SUPPLY    AND    DEMAND  321 

they  are  always  measured,  more  or  less  accurately,  in  terms 
of  their  mass;  and  mass  is  always  the  factor  of  extent, 
in  any  form  of  energy. 

Natural  energy-transformations  vary  in  their  dimensions 
throughout  the  widest  scope,  producing  to  the  human  per- 
ceptions the  most  diverse  aspect,  according  as  the  dimen- 
sion of  intensity  or  that  of  extent  be  the  predominating 
one.  The  rise  of  the  tide,  the  fall  of  Niagara  and  the 
glory  of  a  meteorite  appear  very  differently  to  the  human 
senses;  yet  they  may  be  the  display  of  exactly  equal  quan- 
tities of  energy  under  very  different  dimensions.  Years 
of  quiet  growth  of  a  green  willow  tree  and  the  firing  of  a 
13-inch  gun  are  very  dissimilar  phenomena;  yet  they  in- 
volve and  exhibit  identical  quantities  of  chemical  and  ther- 
mal energy.  The  sale  of  a  railroad  for  ten  millions  and 
the  nation's  daily  transactions  in  millc  may  be  identical  in 
amount  of  economic  energy  involved;  but  the  dimensions 
of  price  and  extent  involved  in  the  two  transactions  are 
so  very  dissimilar  that  it  seems  difficult  to  trace  anything  in 
common. 

It  must  be  remembered,  too,  that  energy-transforma- 
tions are  not  really  caused  by  the  usual  visible  originator 
of  the  phenomenon.  An  old  woman  with  a  cow  and  a 
candle  may  start  a  conflagration  which  wipes  out  a  city;  a 
boy's  toy-pistol  may  detonate  a  hundredweight  of  dyna- 
mite. The  energy  visible  in  the  result  is  not  to  be  traced 
to  the  accident  of  environment  which  set  it  free,  but  to  the 
store  of  latent  potentiality,  accumulated  at  some  preced- 
ing period,  which  transforms  itself  into  that  result.  The 
blame  for  the  burning  of  the  city  does  not  rest  with  the 
old  woman,  but  with  the  architecture  of  the  preceding 
generation.  The  boy  with  the  toy-pistol  is  not  held  ac- 
countable for  the  explosion  of  the  dynamite,  but  rather  the 


322  THE    COST    OF    COMPETITION 

person  who  left  it  unprotected.  Similarly,  in  economics,  a 
'drop  of  a  few  points  on  an  insignificant  stock  may  break 
the  market  and  cause  a  panic.  The  tax  on  a  pound  of 
tea  may  incite  a  revolution.  In  neither  case  is  the  vnsible 
or  apparent  cause  of  the  result  the  real,  commensurate  or 
rational  one.  This  last  must  be  looked  for  In  the  earlier 
accumulation  of  potentiality  beyond  the  safety-point, 
awaiting  only  the  proper  conditions  to  set  itself  free  in 
its  destructiv^e  or  constructive  task. 

Demand.  It  is  obvious  that  a  very  high  price  may 
prevail  in  regard  to  a  certain  commodity  and  yet  there  be 
very  little  demand  for  it,  partly  from  the  very  fact  of  the 
high  price  and  partly  from  purely  external  natural  causes. 
This  is  the  case,  for  instance,  with  iridium,  or  with  amber- 
gris. Or  the  public  may  desire,  be  willing  to  pay  for  and, 
indeed,  may  insist  on  having,  a  certain  article  to  a  tremen- 
dous extent,  and  yet  the  price  may  be  very  low.  This,  for 
instance,  is  the  case  with  water.  In  each  case  the 
economic  demand  for  the  article,  the  industry  set  on  foot 
and  supported  by  its  pressure,  is  comparatively  slight.  In 
the  first  case  physical  or  biologic  demand  is  almost  nil; 
in  the  second  case  it  is  very  great.  But  the  quantity  of 
economic  demand  may  be  the  same  in  both  cases.  In  the 
latter  case  the  low  price  and  the  wide  extent  of  demand 
are  due  almost  entirely  to  natural  causes — the  plentiful 
distribution  of  water  over  the  earth's  surface  and  its  great 
need,  comfort  and  convenience  in  human  life.  In  the 
former  case  the  limited  extent  of  demand  may  or  may  not 
be  due  to  the  difficulty  of  procuring  the  commodity  in 
question.  Iridium  appears  to  have  a  very  limited  utility 
in  the  arts;  but  what  width  of  application  might  be  dis- 
covered or  developed  if  a  lower  price  once  made  It  widely 
available  cannot  be  safely  predicted.      In  general  it  may 


SUPPLY    AND    DEMAND 


323 


be  said  that  there  is  no  broad  natural  law  of  interdepend- 
ence, as  of  cause  and  effect,  between  price  and  extent  of 
demand.  Either  factor  may  take  the  initiative  in  influenc- 
ing the  other. 

But,  on  the  other  hand,  for  any  one  commodity  or 
group  of  commodities,  in  a  given  community  and  within 
a  properly  limited  period  of  time,  there  is  a  fixed  mutual 
relation  between  the  two. 


Fig.  23.  The  Curve  of  Demand 

This  relation  may  be  represented  graphically  in  a  field 
of  rectilinear  coordinates,  such  as  Fig,  23,  in  which  the 
abscissas  represent  extent  and  the  ordinates  price  of  de- 
mand. In  such  a  field  the  locus  of  demand  will  take 
approximately  the  form  of  an  equilateral  hyperbola,  such 
as  DD,  asymptotic  to  the  two  axes.  If  m^,  m^  and  w/3 
represent   three   different   stages   of   a   market   when   the 


324  THE    COST    OF    COMPETITION 

prices  0/)^,  Op^  and  Op-,,  prevail,  respectively,  the  extent 
of  demand  at  each  stage  will  be  given  by  Oe^,  Oe^  and 
0^3.  The  potential  economic  energy  represented  by  the 
market  at  each  stage,  respectively,  would  be  measured  by 
the  areas  Opiin^e^,  Opom^e^  and  Op^m^e.^. 

The  argument  by  which  this  proposition  is  supported 
is  largely  one  of  limits.  It  is  obvious  in  the  first  place, 
from  general  observation,  that  within  the  limits  of  a  given 
community  and  of  a  given  stage  of  development  of  the 
arts,  price  is  a  function  of  extent  of  demand,  or  vice  versa, 
and  a  continuous  function.  This  function  is  not  neces- 
sarily the  same  for  all  individual  communities.  It  is  not 
necessarily  the  same  for  any  one  commodity  for  all  time. 
Factors  physical,  political  and  ethical  may,  and  undoubt- 
edly do,  vary  this  function  with  time.  But  so  far  as 
purely  economic  forces  are  concerned,  the  forces  which 
depend  solely  upon  the  commercial  relation  of  man  to 
man,  price  and  extent  of  demand  undoubtedly  preserve  a 
continuous  mutual  function  which  is,  comparatively  speak- 
ing, a  very  stable  affair. 

Since  the  relation  between  increase  of  price  and  increase 
of  extent  of  demand  is  always  an  inverse  one,  that  is,  the 
higher  price  always  coinciding  with  the  more  restricted 
demand  and  the  lower  price  with  the  greater  demand,  the 
locus  of  their  coincidence  must  be  convex  toward  the 
origin. 

Since  either  factor  must  pass  to  infinity  in  order  to 
reduce  the  other  to  zero,  this  locus  must  be  asymptotic  to 
the  zero-axis  of  each  factor. 

It  is  no  negative  to  this  last  proposition  to  say  that  cer- 
tain commodities  sometimes  fall  in  market-price  to  zero, 
as  does  city-water  sometimes,  for  instance,  while  the  extent 
of  demand  still  remains  finite.  The  visible  price  of  city- 
water,  in  cents  charged  and  collected  per  thousand  gallons 


SUPPLY    AND    DEMAND  325 

used,  is  often  arbitrarily  declared  to  be  zero.  The 
absolute  price  remains  a  finite,  positive  quantity,  percep- 
tible in  the  tax-rate,  and  in  the  pressure  exerted  by  the 
water-department  to  restrict  leakage  and  wanton  waste. 
Another  such  instance  is  that  of  fresh  air,  which  is  not 
represented  as  an  expense  to  the  community  even  in  the 
tax-rate.  Yet  it  is  an  undoubted  economic  factor  in  the 
rental-value  of  office-buildings,  etc.  It  is  so  necessary  to 
human  existence  and  it  is  so  difficult  to  obtain  that  it  is 
now  presented,  to  those  who  are  artifically  prevented 
from  imbibing  it  with  natural  freedom,  at  the  rate  of  so 
many  dollars  per  head,  through  the  medium  of  the  fresh- 
air  funds. 

Nor  is  it  a  sufficient  negative  to  show  that  for  a  given 
population  the  consumption  of  a  certain  commodity  often 
reaches  a  maximum  of  surfeit,  as  might  be  the  case  with 
apples,  for  instance,  which  would  never  be  exceeded,  no 
matter  how  low  the  price  might  become.  In  the  first 
place,  although  the  price  of  apples  at  the  point  of  produc- 
tion often  reaches  a  practical  zero  to  the  farmer,  the  price 
to  a  large  number  of  possible  consumers  never  drops 
below  a  certain  minimum  of  quite  appreciable  size.  In 
other  words,  the  curve  stops  before  any  evidence  is  to  be 
had  as  to  its  extreme  coordinates.  Again,  the  price  may 
fall  after  the  extent  has  reached  its  maximum;  but  if  so,  it 
shows  the  operation  of  forces  other  than  those  of  ex- 
change, working  for  a  general  scaling  down  of  price- 
levels. 

The  same  is  true  of  a  maximum  of  price  and  a  minimum 
of  extent  of  demand.  There  seems  to  be  almost  no  price 
which  may  be  asked  for  a  commodity  which  is  so  high  that 
some  few  individuals  will  not  be  found  willing  to  pay  it — 
often  those  of  the  sort  who  are  attracted  solely  by  the 
high  price.     Except   for  cases  of  psychological  affection 


326  THE    COST    OF    COMPETITION 

for  some  individual  article  on  the  part  of  some  individual 
possessor,  it  is  impossible  to  conceive  price  being  forced 
so  high  as  to  produce  a  zero-extent  of  exchange.  When 
some  individual  owner  does  this  he  merely  proves  his 
departure  from  the  market-price,  and  not  that  the  market- 
price  has  varied  from  the  law  stated  above  to  one  in  which 
the  curve  could  reach  the  zero-axis  of  extent. 

The  final  determining  consideration  of  the  form  of  the 
demand-curve  is  based  upon  the  fact  that,  for  any  one 
given  time  or  place,  the  purchasing-power  of  the  public  is 
sensibly  constant.  It  may  be  a  vibratory  constant,  some- 
times greater,  sometimes  less,  to  a  slight  degree.  It  may 
be  a  slow  variable  with  time.  It  undoubtedly  varies  with 
locality.  But  for  any  one  community  and  limited  period 
of  time  the  average  total  income,  or  that  portion  of  it 
which  it  feels  free  to  expend  for  current  consumption 
remains  fixed. 

This  simple  fact  is  one  of  the  fundamentals  of  eco- 
nomic argument.  It  must  be  perceived  that  it  is  a  rigid 
fact.  It  must  be  perceived  that  while,  as  just  recognized, 
the  purchasing-power  of  a  people  may  vary,  it  not  only 
varies  slowly,  but  it  varies  only  at  the  behest  of  mighty 
forces.  Nature  may  supply  such  forces.  Favorable 
weather,  producing  extra  crops,  facilitating  transporta- 
tion, modifying  the  cost  of  living  may  do  it.  But  such 
forces  are  purely  temporary,  gone  with  the  season,  and 
produce  only  temporary  results.  Their  average  effect  is 
necessarily  zero,  for  we  have  as  many  bad  seasons  as  good. 
Moreover,  their  effect  is  nearly  always  local. 

Human  institutions  may  supply  such  forces.  War, 
taxation,  tariffs  and  their  opposites,  commercial  legisla- 
tion of  any  sort,  in  fact;  religious  beliefs  and  prejudices, 
social  customs,  race  and  caste  limitations — these  all 
undoubtedly  affect  the  purchasing-power  of  a  people.     But 


SUPPLY   AND    DEMAND  327 

all  of  such  forces  except  the  legislative  ones  are  immov- 
able, beyond  the  control  of  the  deliberate  individual  will; 
and  as  to  the  legislative  ones,  there  the  relation  between 
cause  and  effect  is  so  obscure,  there  is  so  little  public 
knowledge  of  and  confidence  in  what  slight  science  of 
social  dynamics  now  exists,  that  the  result  is  as  vagarious, 
as  surprising,  and  is  accepted  with  as  general  a  feeling  of 
resignation  or  of  unreasoning  indignation  as  are  those  of 
climatic  irregularities. 

So,  when  all  is  said,  it  remains  that  the  purchasing- 
power  of  a  community  is  always  either  its  producing- 
power  or  something  less  than  that;  and  in  virtual  effect, 
for  any  one  commercial  division  of  the  globe,  under  any 
given  set  of  laws,  for  any  one  period  of  time  not  so  short 
as  to  include  only  one  change  of  season  nor  so  long  as  to 
cover  great  evolutionary  developments,  the  purchasing- 
power  of  the  people  is  constant. 

Translating  this  into  geometric  language,  the  total 
amount  of  exchange,  given  by  multiplying  price  by  extent, 
must  remain  sensibly  constant.  It  is  measured  graphically 
by  the  areas  of  the  rectangles  Opiin^e,  etc.,  of  Fig.  23. 
If  those  rectangles  be  all  equal,  the  curve  DD  is  an  equi- 
lateral hyperbola. 

Supply.  The  subjective  source  to  which  demand 
appeals  for  its  supply  of  energy  is  supply.  Except  for 
supply,  the  consumer  might  range  his  demand  up  and 
down  the  entire  gamut  of  price  and  extent,  yet  no 
exchange  would  result.  It  is  therefore  necessary  to 
establish  the  general  form  of  the  curve  giving  the  relation 
between  price  and  extent  of  supply,  as  has  just  been  done 
for  demand. 

The  first  step  in  this  process  is  to  note  that,  while  with 
demand  the  relation  between  price  and  extent  is  inverse, 
in  the  case  of  supply  it  is  direct.     That  is,  the  extent  of 


328  THE    COST   OF   COIMPETITION 

the  supply  of  a  commodity  usually  increases  with  increas- 
ing price  and  decreases  with  decreasing  price.  This  must 
indicate  a  curve  departing  simultaneously  from  both  axes 
and  passing  across  the  axis  of  price  at  a  certain  distance 
above  the  origin.  For,  in  order  to  instigate  even  the 
slightest  amount  of  production,  there  must  be  some  appre- 
ciable price  offered.  Very  often  this  price  is  a  perfectly 
definite,  actual  affair,  even  when  there  is  no  production  at 
all.  Such  is  the  case  with  contracts  for  special  work, 
where  a  price  is  made  upon  the  specifications  before  pro- 
duction is  entered  upon,  or  is  even  expected  with  certainty. 
The  same  is  true  of  subscriptions  taken  for  works  which 
will  be  produced  if  suflficient  subscriptions  are  offered. 

For  all  small  variations  in  the  extent  of  supply  the  price 
is  constant;  that  is,  the  supply-curve  is  a  straight  hori- 
zontal line.  If  the  supply  of  considerably  increasing 
quantities  of  a  given  commodity,  however,  involving  the 
employment  of  increasing  numbers  of  men,  be  undertaken 
in  a  given  establishment  under  given  methods  of  produc- 
tion, the  Law  of  Decreasing  Returns  applies.  The  price 
will  increase  with  the  extent  of  supply  and  the  apparently 
straight  horizontal  supply-line  will  rise  as  it  passes  to  the 
right.  Such  is  the  situation  when  the  fluctuations  in 
extent  of  demand  are  prompt,  temporary  or  violent. 

If  the  increase  in  supply  of  a  commodity  occur  slowly 
enough,  however,  it  permits  alteration  and  development 
of  both  the  supplies  of  raw  material  and  the  methods  of 
manufacture;  machines  can  be  designed  for  carrying  on 
processes  formerly  performed  by  hand;  men  can  be  trained 
into  specialization  upon  smaller  and  smaller  subdivisions 
of  the  work.  Under  such  conditions  the  Law  of  Increas- 
ing Returns  applies  and  the  supply-curve  will  fall  as  it 
passes  to  the  right.  Such  is  always  the  form  assumed  by 
the  supply-curve   in  conjunction  with  the  lapse  of  time. 


SUPPLY   AND    DEMAND 


329 


Because  the  increase  of  goods  produced  always  maintains 
a  higher  rate  than  the  increase  in  number  of  workers,  how- 
ever, the  curve  is  a  comparatively  flat  one,  dropping  very 
slowly  as  it  proceeds  to  the  right.^ 

Because  the  balance  between  these  two  processes  for 
the  increase  of  output:  multiplication  of  men  and  of 
methods,  respectively,  will  be  different  in  each  commodity 


Fig.  24.  Demand  and  Supply  Curves,  and  the  Market 

considered,  for  present  purposes  they  will  be  considered 
as  balancing  each  other,  thus  making  of  the  supply-curve 
a  straight  line  (to  which  it  must  approximate  in  any 
event).  Such  curves  are  shown  at  AS^,  AS2,  etc.,  in 
Fig.  24. 

3  The  degree  to  which  each  individual  laborer  may  respond  with  in- 
creased activity  to  an  increased  price  for  his  product  is  a  purely  biologic 


330  THE   COST   OF   COMPETITION 

The  progress  of  events  always  tends  to  cheapen  all  of 
the  accessory  costs  of  production.  Better  supplies  of 
raw  material  are  developed;  a  fund  of  specially  trained 
labor  accumulates.  Therefore  the  scale  of  cost  for  any 
given  extent  of  production  will  tend  to  diminish  slowly. 
Such  a  progress  of  events  is  shown  by  the  vectoral  swing 
of  the  supply-curve  about  its  origin,  as  from  AS^  to  AS2, 
then  to  AS3,  etc.,  in  Fig.  24. 

The  energy  of  demand,  once  existent,  finds  expression 
at  the  lowest  possible  price.  This  is  the  common  phe- 
nomenon of  the  tendency  to  buy  in  the  cheapest  market. 
Therefore,  the  scale  of  the  curve  DD  of  Fig.  23  or  Fig. 
24  having  been  determined,  by  the  purchasing-power  of 
the  community  in  question,  all  that  intensity  of  individual 
desire  can  accomplish  is  to  press  downward  and  outward 
along  the  curve,  toward  the  point  of  lowest  price  and 
greatest  extent  of  exchange.  Thus,  if  we  suppose  all 
the  factors  in  the  production  and  exchange  of  a  given  com- 
modity to  be  constant,  except  that  the  methods  of  pro- 
duction advance  with  time,  we  shall  have  the  state  of 
affairs  shown  in  Fig.  24.  Here  let  JS^  be  the  supply- 
curve  of  a  recently  invented  commodity,  when  methods 
are  crude,  and  AS2  and  JS-^  be  the  same  curve  in  later 
periods,  when  more  perfected  methods  have  been  evolved 

phenomenon;  moreover,  the  extent  to  which  it  appears  as  a  factor  in  in- 
creased production  is  insignificant,  if  not  zero,  so  long  as  his  efforts  are 
confined  to  a  single  commodity.  That  is  to  say,  he  is  himself  then  subject 
to  the  law  of  decreasing  returns.  For  a  limited  time  and  to  a  limited  ex- 
tent he  may  be  spurred  by  higher  income  to  produce  above  his  natural 
average  productivity;  but,  sooner  or  later,  by  natural  gravitation,  he  must 
drop  back  into  the  rate  determined  by  his  racial  and  inherited  character- 
istics. This  is  clearly  shown  in  the  history  of  the  piece-work  system  of 
wages.  If  the  increased  price  for  his  labor  take  the  form  of  shorter 
hours,  permitting  greater  variety  in  the  daily  life  and  a  higher  general 
scale  of  living,  his  quality  of  productivity  will  respond  thereto  very 
promptly.  But  in  the  ordinary  fluctuations  of  the  volume  of  demand  and 
supply  this  process  cannot  enter. 


SUPPLY    AND    DEMAND  331 

by  experience  and  invention.  Then,  if  the  demand-curve 
DD  remain  constant  during  this  period,  that  is,  if  neither 
the  population  alters  nor  the  popular  fancy  for  the  com- 
modity be  stimulated  or  depressed  by  external  educational 
agency,  the  market  will  advance  progressively  from  Wi 
to  W2  ^fid  then  on  to  w.j,  etc.  At  first  the  price  will  be 
Opx  and  the  extent  of  purchase  Oe^ ;  later  the  price  will 
fall  to  Op.2,,  and  finally  to  Op^,  while  the  extent  of  con- 
sumption correspondingly  advances  to  Oe^  and  to  O^o. 

In  the  first  period  of  production  of  the  article  the 
curve  OiSj  rises  very  steeply  because  both  the  sources  of 
raw  material  and  the  supplies  of  labor  skilled  in  this  par- 
ticular service  have  not  yet  been  developed.  Increasing 
demands  for  the  article  develop  marked  difficulty  in  pro- 
portionately increasing  the  supply  to  meet  them.  In  con- 
sequence, only  a  very  small  proportion  of  the  population 
can  afford  to  pay  the  high  price  p^  which  is  necessary  in 
order  to  induce  the  production  of  even  the  small  amount 
e^.  But  the  high  price  soon  attracts  to  the  new  industry 
additional  skill  and  energy,  new  supplies  of  raw  material 
are  found  and  in  time  labor  becomes  more  widely  skilled 
in  this  direction.  In  consequence,  the  difficulties  which 
resulted  in  the  production  of  increased  quantities  only  at 
exaggerated  cost  are  mitigated,  and  the  angle  of  inclina- 
tion ASi  to  OE  must  sink  to  a  less  abrupt  one,  as  at  AS2, 
and  finally  to  a  position,  such  as  AS-^,  which  may  be 
regarded  as  a  final  and  stable  one.^ 

4  It  must  be  noted  that  the  curve  DD  of  Fig.  24  does  not  represent  quite  the 
same  phenomenon  as  that  of  Fig.  23  ;  hence,  its  equation  is  not  necessarily 
the  same,  although  its  general  form  is.  Fig.  23  presented  the  demand-curve 
for  an  entire  community,  covering  all  commodities  purchased.  For  such 
total  purchases  the  capacity  of  the  community  is  fixed.  Fig.  24  presents 
a  demand-curve  for  a  single  commodity.  The  portion  of  the  community's 
purchasing-power  which  finds  expression  therein  is  variable.  Therefore,  it 
cannot  be  an  equilateral  hyperbola.     Yet  the  argument  which  gives  to  all 


332  THE    COST    OF   COMPETITION 

Market-Equilibrium.  In  this  gravitational  rota- 
tion of  AS  about  A  the  final  position  of  stability  is  deter- 
mined by  equilibrium  between  the  forces  producing  rota- 
tion and  the  resistance  encountered.  The  motive  force  is 
the  tendency  to  purchase  at  lower  prices,  a  purely  vertical 
force  on  the  diagram.  The  resistance  consists  of  the 
natural  inertia  of  the  human  race  to  changes  of  method 
and  amount  of  production  and  of  ignorance  as  to  how 
to  extend  them,  a  purely  horizontal  force  on  the  diagram. 
The' two  are  exhibited  in  the  demand-and-supply-curves, 
respectively.  Their  relation  in  the  actual  market  at  any 
time  is  exhibited  in  the  intersection  of  the  two  curves. 
The  sharper  this  angle  the  greater  is  the  mechanical 
advantage  of  the  resistance  over  the  motive  power  and 
the  less  the  tendency  of  the  market  to  move  toward  a 
greater  extent  of  exchange  in  order  to  attain  a  given 
decrease  in  price  by  increasing  the  scale  of  production. 

This  action  may  be  well  illustrated  by  imagining  AS 
to  represent  a  bar  hinged  against  the  wall  at  A  and  sup- 
ported, at  the  point  of  intersection  with  DD^  by  a  cross- 
bar resting  freely  upon  that  curve.  It  is  plain  that  the 
bar,  if  originally  in  the  position  AS-i,  would  fall  down,  by 
rotating  to  the  right  about  A,  until  the  friction  of  the 
sliding  of  the  cross-bar  between  the  two  curves  at  m  was 
sufficient  to  stop  it.  Equilibrium  being  thus  reached  at 
the  point  W;j,  mechanics  would  call  the  angle  S.^m^D  the 
angle  of  friction  of  the  particular  surfaces  involved.    In 

demand-curves  the  hyperbolic  form  applies  also  to  Fig.  24.  There  the 
equation  of  DD  can  be  stated  only  in  the  form 

PE'  =  a  constant. 

Because,  as  time  advances,  the  purchasing-power  accorded  to  any  novel 
commodity  usually  increases,  the  areas  of  the  rectangles  Orrii,  Om-,  etc., 
must  be  progressively  greater.  In  which  case  the  value  of  x  must  be 
greater  than  unity. 


SUPPLY    AND    DEMAND  333 

such  a  case  the  motive  force  would  be  the  vertical  one  of 
gravitation,  as  it  is  of  price  in  Fig.  24.  The  resistance 
would  be  the  almost  horizontal  one  of  friction  upon  the 
two  surfaces  inS  and  ;///),  as  it  is  in  Fig.  24  the  purely 
horizontal  one  of  human  reluctance  to  Increased  extent 
of  production.  Therefore,  the  conclusion  which  has  been 
drawn  is  no  trick  of  chosen  scales  of  drawing.  It  depends 
solely  upon  the  general  statement  that  the  natural  gravita- 
tion will  take  place  until  the  resistance  possesses  a  marked 
mechanical  advantage  over  the  motive  force;  that  Is  to 
say,  until  the  quantity  of  output  which  must  be  added  to 
the  prevailing  rate  in  order  to  effect  a  given  drop  In  price 
becomes  too  great  to  be  worth  the  trouble.  Moreover, 
since  this  advantage  Is  steadily  increasing,  both  in  the 
economic  original  and  in  the  mechanical  simile,  the  situa- 
tion is  shown  to  be  one  of  stable  equilibrium.  No  further 
motion  can  ensue. 

Summary.     To  summarize  what  has  been  proven : 
( i)    The  demand  curves  are  hyperboloidal  in  form; 

(2)  When  applied  to  the  community  as  a  whole,  cover- 
ing all  commodities,  the  hyperbolas  are  equilateral; 

(3)  For  any  one  commodity,  under  fixed  conditions 
of  public  taste  and  varying  conditions  of  supply,  these 
hyperbolas  have  exponential  values  (for  the  factor  of 
extent)    greater  than  unity; 

(4)  For  any  one  commodity  the  gravitational  forces 
acting  upon  the  market  tend  always  downward  and  to  the 
right; 

(5)  This  gravitation  brings  the  curves  of  supply  and 
demand  Into  intersection  at  sharper  and  sharper  angles, 
whereby  the  market  Is  brought  ever  Into  more  and  more 
stable  equilibrium,  tJie  variations  in  extent  of  exchange 
growing  ever  greater  and  greater  in  proportion  to  given 
variations  in  price. 


334  THE    COST    OF    COMPETITION 

Current  economic  history  gives  daily  illustrations  of 
the  processes  depicted  in  the  preceding  diagrams  and 
leading  to  the  above  conclusions.  The  growth  of  scien- 
tific knowledge  and  its  increasing  application  to  the  arts 
bring  forth  an  unending  series  of  novel  commodities, 
invaluable  in  their  possibilities  for  the  growth  of  the 
human  race.  As  each  appears  it  takes  its  stand  in  the  in^ 
locality,  hard  to  get,  high  in  price  and  enjoyed  by  only  a 
few.  As  time  elapses  it  begins  its  gravitational  journey 
downward  and  to  the  right.  All  social  forces  of  an  edu- 
cational and  elevating  character  are  expressed  by  a  rota- 
tive fall  of  the  supply-curves  toward  the  right.  Those 
natural  tendencies  in  the  human  organism  which  become 
visible  as  a  love  of  learning,  of  discovery,  of  invention,  of 
efficiency  of  effort,  must  always  make  for  the  production 
of  larger  and  larger  quantities  of  goods  upon  a  more  and 
more  systematic  and  efficient  scale.  The  love  of  power, 
which  leads  man  to  organize  his  fellow-workers  into  a 
compact,  harmonious,  obedient  and  efficient  body  beneath 
his  control;  the  love  of  adventure,  which  leads  him  into 
unknown  regions  and  conditions;  the  love  of  creative 
invention,  which  has  ever  kept  his  head  full  of  wheels  in 
spite  of  every  discouragement  in  the  shape  of  poverty 
which  the  world  has  been  able  to  heap  upon  the  inventor; 
the  love  of  knowledge,  of  absolute,  natural  truth:  all  of 
these,  which  we  are  no  nearer  to  understanding  after  all 
our  analyses,  must  find  expression  in  the  rotation  of  the 
supply-curves,  in  these  diagrams,  about  their  origin  down- 
wards and  to  the  right. 

The  Normal  Relationship  Between  Drop  in  Price 
and  Response  in  Extent  of  Exchange.  This  prop- 
osition that  alteration  in  market-price  produces  much 
more  than  proportionate  alteration  in  the  extent  of  con- 
sumption is  a  very  important  one  and  constitutes  the  chief 


SUPPLY    AND    DEMAND  335 

guide  in  prediction  as  to  what  will  occur  In  the  future. 
Stated  in  more  popular  language,  it  is  to  the  effect  that  if 
the  price  of  beans,  for  instance,  should  fall  by  10  per  cent., 
the  consumption  of  beans  would  increase,  not  by  10  per 
cent.,  nor  by  any  figure  similar  to  that,  but  by  25 
or  40  per  cent,  or  by  some  other  figure  proportionately 
very  much  greater  than  10  per  cent.  If,  as  is  quite 
imaginable,  the  public  is  already  eating  all  the  beans  that 
it  can,  then  the  increase  in  the  extent  of  its  purchases  will 
appear  in  an  increased  consumption  of  other  commodi- 
ties, and  almost  always  of  those  indicating  a  higher  grade 
of  life  than  was  before  available. 

The  Distortion  and  Suppression  of  the  Natural 
Law  of  Supply  and  Demand.  This  law  holds  true, 
however,  under  'the  limitation  of  one  condition,  which 
applies  equally  to  all  the  laws  of  supply  and  demand : 
The  commodities  in  question  must  be  those  actually  con- 
sumed by  the  purchasers.  Demand  coming  from  such 
consumers  is  an  integration  of  the  natural  psychic  forces 
of  the  million.  Demand  coming  from  buyers  in  whole- 
sale markets,  on  the  other  hand,  whether  of  goods  or  of 
securities,  or  from  buyers  of  articles  used  for  production 
instead  of  for  consumption,  is  a  resultant  of  forces  which 
are  intellectual  rather  than  psychic,  which  are  artificial 
rather  than  natural.  Thus,  a  purchaser  of  bar-iron  to  be 
worked  up  into  a  special  form  of  bolt  is  influenced  by  far 
different  considerations  than  by  the  average  rate  of  actual 
consumption  of  such  bolts,  which  would  be  the  natural 
indicator  of  the  proper  rate  of  production.  He  keeps  his 
eye  upon  the  market  in  a  purely  intellectual  fashion,  buy- 
ing when  bar-iron  is  low  or  labor  is  cheap  or  strikes  are 
unlikely  or  the  money-market  is  easy  or  when  his  debtors 
pay  up — and  all  of  these  factors  are  much  more  artificial 


336  THE    COST    OF    COMPETITION 

and  more  subject  to  human  control  than  is  now  readily 
believed  to  be  so. 

Or  again,  the  manager  of  a  street-railway  does  not 
purchase  street-cars  because  he  has  a  taste  in  that  direction, 
because  he  likes  to  spend  his  time  riding  in  them,  or  because 
he  imagines  himself  a  connoisseur  fit  to  form  a  collection 
of  rare,  artistic  or  scientific  specimens  of  street-car  con- 
struction. Neither  does  he  buy  them  because  other  people 
would  like  to  ride  in  them;  if  he  did,  he  would  buy  many 
more  than  he  does,  and  much  more  comfortable  ones. 
He  buys  because  he  has  a  taste  for  dividends,  not  street- 
cars, and  because  his  intellect  tells  him  that  in  order  to 
acquire  dividends  he  must  take  into  consideration  the 
public  comfort  to  some  certain  degree.  But  the  real  con- 
sideration which  directs  his  choice  is  the*  need  for  that 
sort  and  number  of  cars  which,  when  run  upon  his  par- 
ticular tracks  by  his  particular  motive  power  and  under 
the  particular  grade  of  public  opinion  with  which  he  has 
to  contend,  will  return  the  maximum  net  profit  per  dollar 
of  investment. 

This  is  his  sole  aim,  if  he  be  a  good  business-man. 
To  accuse  him  of  any  more  altruistic  attitude  would  be 
not  only  to  egregiously  stretch  one's  faith  in  human 
nature,  but  it  would  question  his  right  to  his  position. 
He  receives  his  pay,  in  the  form  of  dividends  as  well  as 
salary,  for  doing  just  this  thing,  and  he  does  it.  Just  so 
far  as  serving  the  public  aids  in  this,  or  even  so  far  as  he 
may  be  able  to  serve  the  public  without  interference  with 
it,  he  does  so;  but  the  other  comes  first  and  is  the  guiding 
factor  in  the  situation.  The  universal  readiness  of  bus- 
iness-directors to  restrict  output  when  it  will  increase  prof- 
its is  prima  facie  evidence  of  this.  The  universal  policy 
of  "  charging  all  the  traffic  will  bear,"  which  every  bus- 
iness-man   follows  under  another  name,   is  just  this   and 


SUPPLY   AND    DEMAND  337 

nothing  else.  It  consists  in  the  wise  restriction  of  service, 
to  the  exaltation  of  prices,  until  the  net  profits  reach  a 
maximum ;  without,  of  course,  overdoing  the  matter  so 
as  to  kill  the  business.  Such  a  policy  is  very  different,  the 
exact  opposite,  in  fact,  from  a  true  policy  of  seeking  to 
give  the  maximum  service  which  will  pay  natural  expenses. 
In  the  face  of  such  considerations  as  these  it  were  most 
inaccurate  to  regard  the  production  of  street-cars  as 
obedient  to  the  public  demand  for  urban  transportation, 
except  in  a  purely  secondary,  incidental  and  fractional 
way.  For  the  demand  for  transportation  cannot  be 
addressed  to  those  who  furnish  transportation :  the  con- 
ductors, motormen,  car-builders,  engineers  and  superin- 
tendents. Neither  the  people's  money  nor  the  people's 
voice  is  permitted  to  penetrate  to  their  influence.  The 
people  may  be  willing  to  pay  more  for  a  given  grade  of 
service  or  they  may  demand  to  be  charged  less;  they  can- 
not say  this,  either  literally  or  in  effect,  to  the  men  with 
whom  they  are  really  trading,  those  listed  above.  They 
must  address  the  president  of  the  road,  they  must  pay 
their  money  to  him;  and  he  is  not  the  representative  of 
the  motormen  and  car-builders.  He  is  the  representative 
of  the  stockholders,  whose  interests  are  wholly  antag- 
onistic to  theirs.  Neither  the  public  nor  the  motormen 
have  any  representative,  except  that  the  latter  have  their 
labor-leaders,  flouted  by  the  public  and  unrecognized  by 
law, — as  if  it  were  in  the  least  businesslike  for  a  set  of  men, 
whether  of  stockholders,  motormen  or  riding  public,  to 
attempt  to  do  business  with  the  others  without  the  offices 
of  a  single  legal  representative  head,  through  which  all 
communications  may  pass,  and  whose  word  possesses 
authority.  So  between  the  Demand  of  the  public,  ex- 
pressed in  the  money  they  pay,  and  the  Supply  maintained 
by  the  railway  workers,  measured  by  what  they  are  paid, 


338  THE    COST    OF    COMPETITION 

stands  the  official  of  the  corporation,  representing  neither 
Supply  nor  Demand,  neither  running  the  cars  (his  super- 
intendent does  that)  nor  paying  for  it  (the  public  does 
that),  but  the  representative  of  a  third  party,  the  stock- 
holders, who  are  quite  extraneous  to  either  Demand  or 
Supply,  not  demanding  transportation  at  all,  demanding 
only  dividends,  and  not  supplying  anything  at  all,  but 
rather  idly  absorbing  all  they  can  get. 

Wherefore  it  must  be  plainly  evident  that  the  process 
of  Supply  and  Demand,  so  frequently  referred  to  as  the 
sovereign  guidance  of  the  economic  world, — which,  In- 
deed, it  should  be, — has  now  almost  no  opportunity  what- 
ever for  full  or  accurate  operation.  By  the  presence  of 
Barter  both  factors  to  it  are  egregiously  interfered  with 
and  repressed.  Supply  is  unnaturally  stunted,  because  It 
receives  in  return  only  a  small  fraction  of  its  natural  pro- 
ductivity, only  a  small  fraction  of  what  Demand  actually 
pays,  and  because  Competition  draws  away  from  it  into 
Its  own  ranks  all  of  the  best  and  ablest  men.  Demand  is 
unnaturally  stunted  because  It  can  find  expression  only  to 
the  amount  of  the  nation's  purchasing-power.  Instead  of 
to  the  amount  of  Its  much  greater  producing  power. 
Both  processes  are  not  only  stunted,  they  are  very  much 
dulled  as  to  sensitiveness  and  accuracy,  by  the  Impossi- 
bility of  direct  appeal  from  the  Consumer,  who  exerts 
Demand,  to  the  Producer,  who  conducts  Supply.  The 
first  must  address  his  persuasive  eloquence  of  cash,  and 
the  second  must  advertise  his  need  of  inducement,  both 
to  a  third,  intermediary  party,  the  Barterer,  whose  prime 
interest  it  is  artificially  made  to  be  to  prevent  the  passage 
of  the  communication:  not  to  let  Supply  perceive  how 
much  is  paid  for  the  service  supplied,  not  to  let  Demand 
perceive  for  what  a  small  fraction  of  what  Is  paid  Supply 
is  content  to  supply. 


SUPPLY   AND    DEMAND  339 

Supply   and    Demand    Freed    from     the    Brake. 

The  results  to  the  community  as  a  whole  from  this  sad 
lack  in  our  system  of  internal  communication  has  already 
been  portrayed  in  the  preceding  chapters,  for  which  en- 
trance into  these  details  was  not  necessary.  They  become 
of  interest  only  when  attempt  is  made  to  imagine  the 
future  fruit  of  the  possible  abolition  of  barter.  In  such 
a  case  the  surest  guide  to  foresight  as  to  what  will  happen 
comes  from  a  study  of  the  extent  and  the  manner  In  which 
Supply  and  Demand  will  be  freed  for  their  natural  union, 
so  prolific  of  material  prosperity  for  the  community  as  a 
whole. 

If  we  turn  back  to  Fig.  24,  and  to  the  Summary  of 
our  conclusions  (page  333)  in  regard  to  the  general 
characteristic  of  the  Interaction  between  Demand  and 
Supply,  and  consider  the  market-condition  w..,  it  must  be 
quickly  evident  what  will  be  the  general  effect  of  the 
abolition  of  barter:  a  wide  and  rapid  expansion  of  the 
extent  of  trade. 

Up  to  this  moment  we  have  considered,  among  the 
forces  which  were  causing  this  market  to  gravitate  down- 
ward in  price  and  outward  in  extent,  only  those  operative 
in  the  productive  department,  the  steady  decrease  in  cost 
due  to  increasing  intelligence  and  efficiency  among  the 
workmen,  to  Improved  methods  of  organization  within 
the  shop  and  to  enlarged  scale  of  production.  These 
three  fields  of  growth  have  already  been  subject,  for 
many  years,  to  as  active  an  improvement  as  has  appeared 
to  be  possible.  Everything  which  could  be  said  or  done, 
in  the  wide  and  active  discussion  of  the  technical  problems 
of  shop-management  and  cost  of  work,  in  our  professional 
conventions  of  mechanical  engineers,  in  our  technical 
periodicals  and  engineering  book-press,  and  even  in  our 
college  class-rooms,  to  improve  every  opportunity  visible 


340  THE    COST    OF   COMPETITION 

In  these  three  directions  has  been  said  and  done.  One  of 
our  most  common  bases  for  national  pride  consists  In  the 
contemplation  of  the  world-supreme  efficiency  which  has 
been  already  accomplished  along  these  lines. 

Therefore  it  Is  only  na.tural  to  assume,  as  a  safe  con- 
clusion, that  the  gaps  in  productive  efficiency  yet  to  be 
filled  out  are  comparatively  small  and  obscure.  To  say 
that  we  have  reached  the  limit  of  progress  therein  would 
be  absurd;  but  at  the  same  time  It  is  certain  that  we  can 
proceed  further  only  as  the  slow  change  of  environment 
permits,  only  as  the  Independent  advance  of  scientific 
attainment  in  the  material  arts,  the  general  average  of 
public  Intelligence  and  the  steady  increase  of  population, 
proceed.  These  growths  are  necessarily  slow  and  steady. 
The  mass  Involved  is  too  great  to  permit  hope  of  any  sud- 
den or  marked  acceleration. 

The  indirect  stimulation  to  rapid  expansion  which  all  of 
these  phenomena  will  experience  from  the  possible  abolition 
of  barter  In  the  future,  will  be  fully  discussed  in  the  second 
portion  of  this  work.  But  that  Is  not  now  our  text.  At 
present  it  is  the  direct  expansion  of  trade  due  to  the  lower- 
ing of  market-prices  by  the  abolition  of  barter.  Here  lies 
open  before  us  an  opportunity  to  cut  down  all  market- 
prices,  at  one  fell  blow,  by  some  seventy  to  seventy-five 
per  cent.  Without  awaiting  any  resultant  increase  In  pro- 
ductivity or  purchasing  power  the  volume  of  trade  would 
Increase  fourfold. 

This  line  of  advance  has  not  hitherto  been  recognized 
and  developed,  either  with  assiduity  or  to  a  degree, 
as  have  the  purely  productive  lines.  Indeed,  its  direction 
has  witnessed  a  backward  rather  than  a  forward  move- 
ment, and  a  powerful  one  at  that.  It  has  already  been 
pointed  out  at  length  how  rapidly  the  cost  of  barter  per 
capita  has  Increased  during  recent  decades.     It  has  been 


SUPPLY   AND    DEMAND  341 

shown  repeatedly  how  its  relative  growth,  in  comparison 
with  that  of  productivity,  has  always  been  the  maximum 
compatible  with  their  arithmetic  difference  remaining  a 
minimum  positive  quantity.  That  is  to  say,  what  prog- 
ress the  point  m^  has  hitherto  made  down  the  demand- 
curve  has  been  due  to  the  difference  only,  between  the 
positive  advance  of  productive  efficiency  within  both  the 
shop-organization  and  the  individual  producer,  on  the  one 
hand,  and  the  negative  advance  of  increasing  cost,  of  both 
organization  and  individual  within  the  office,  on  the 
other.     (See  Fig.  I2rt,  page  257.) 

That  this  difference  has  finally  come,  of  recent  years, 
to  be  a  negative  quantity  itself, — that  the  general  average 
of  prices  has  risen  rather  than  fallen, — there  are  many 
ready  to  assert.  It  may  be  so.  Certainly  there  are  some 
palpable  grounds  for  such  a  belief  in  the  current  market- 
reports.  Certainly  there  is  nothing  in  our  analysis  to 
deny  its  possibility,  as  a  recent  and  temporary  institution. 
Permanently,  it  is  impossible,  of  course;  it  is  against  the 
law  of  gravitation  of  intensities,  as  well  the  conserva- 
tion of  quantities,  of  energy.  But  temporarily  there  may 
occur,  as  periodically  in  history  there  has  occurred,  a  back- 
ing up  of  the  natural  flow  of  economic  life,  a  momentary 
localization  of  intensity  of  energy,  to  the  accumulation 
of  an  economic  pressure  which  must  find  ultimate  vent 
in  economic  revolution;  with  an  incidental  burst  of  eco- 
nomic conditions  down  to,  and  usually  violently  beyond,  the 
level  which  they  would  otherwise  have  attained  in  con- 
tinuous freedom  of  action. 

Therefore  it  must  be  plain  that  there  now  lies  before 
us,  in  the  prospective  breaking  of  this  toppling  dam,  the 
release  of  a  torrential  flood  of  economic  activity  over- 
whelming in  Its  comparison  with  anything  which  has 
hitherto  been  witnessed  in   our  comparatively  even   eco- 


342  THE    COST    OF    COMPETITION 

nomic  progress.  It  has  always  been  so  with  the  release  of 
economic  energy  by  political  changes;  they  have  always 
stimulated  economic  activity  as  economic  forces  never  can. 
We  can  all  of  us  well  remember  the  outbreak  of  the 
Spanish  War,  for  instance:  the  slowly  gathering  period  of 
depression  which  preceded  it;  culminating,  it  is  true,  late 
in  1893,  more  than  four  years  before  the  war  itself,  but 
continuing  fairly  steadily  thereafter,  we  having  become 
accustomed  to  it  rather  than  overcome  it;  and  the  magnifi- 
cent burst  of  economic  activity  which  followed  the  suc- 
cess of  that  war.  And  yet,  if  we  were  to  trace  down  and 
measure  the  magnitude  of  the  alterations  in  demand  (the 
increment  of  purchasing-power  released  by  the  govern- 
ment's war-expenditures)  or  in  the  altered  faith  in  our- 
selves which  aroused  the  nation  from  its  supine  lethargy, 
— -if  we  should  compare  these  economic  and  ethical  magni- 
tudes with  those  now  under  discussion — we  should  find 
them  utterly  insignificant. 

Once,  for  instance,  during  an  investigation  of  the  price 
of  gas  in  the  city  of  Cincinnati,  it  was  testified  by  a  gentle- 
man well  known  throughout  the  State  and  possessing  sub- 
stantial interests  in  gas-properties,  during  examination 
under  oath,  that  if  he  should  ever  become  acquainted  with 
any  improvement  in  the  art  of  making  gas  which,  beyond 
all  doubt,  would  reduce  the  cost  of  manufacture  by  five 
cents  per  thousand  cubic  feet,  he  would  pay  a  million  dol- 
lars for  it  without  the  slightest  hesitation.  This  was  his 
estimate,  not  of  the  total  value  of  such  an  improvement  to 
the  community,  but  of  the  portion  of  it  which  he  might 
expect,  easily  and  without  any  question,  to  reserve  to  him- 
self. What  was  the  entire  value  to  the  community?  What 
would  have  been  that  value  had  the  reduction  in  selling- 
price  been  seventy  per  cent,  instead  of  five  cents,  and  ap- 
plying to  all  industries  instead  of  to  a  single  minor  one? 


SUPPLY    AND    DEMAND  343 

It  is  only  necessary  to  imagine,  in  Fig.  24,  the  rotation 
of  the  supply-curve  about  the  origin  to  the  right  until  the  ■ 
point  W;j,  sliding  out  upon  the  demand-curve,  has  fallen 
to  a  point  seventy  per  cent,  nearer  to  the  horizontal  axis 
than  it  is  now.  That  will  suggest  to  the  mind  the  degree 
and  rate  of  expansion  of  trade  necessarily  resultant  from 
the  legal  abolition  of  barter. 

And  it  is  the  extent  of  trade  which  feeds  the  body  poli- 
tic, not  the  price.  It  is  the  number  of  material  loaves  of 
bread,  gallons  of  milk  and  tons  of  meat  which  count.  No 
one  except  the  barterers  over  them  cares  how  little  they 
may  cost.  It  is  true  that,  in  a  natural  state  of  affairs, 
where  price  could  be  taken  as  a  true  measure  of  value  for 
life-support  instead  of  chiefly  a  measure  of  inflated  valua- 
tion, it  would  be  the  product  of  extent  by  price  which  would 
measure  the  economic  energy  transformed  into  biologic, 
as  already  stated.  But  in  the  lack  of  that  condition  it  is 
proper  to  state  that  the  biologic  energy  present  is  indi- 
cated chiefly  only  by  the  extent  of  goods  handled. 

There  has  been  some  indication  of  this  expansive  rela- 
tion between  price-depression  and  growth  of  extent  of 
trade  already  in  the  history  of  economics.  The  difficulty 
in  observing  it  accurately  lies  in  the  requirements,  first, 
that  the  drop  in  price  m-ust  be  so  sudden  as  to  debar 
extraneous  factors  from  obscuring  the  results, — just  as, 
in  thermodynamics,  i.t  is  only  explosive  expansion  which 
reveals  a  reasonably  true  adiabatic, — and  secondly,  that 
the  price  and  commodity  affected  must  be  one  appealing 
directly  to  popular  consumption.  One  such  instance 
occurred  when  the  Austrian  Government,  in  the  adoption 
of  the  "  zone  system  "  of  railroad  fares,  incidentally 
dropped  the  average  rate  of  fare  over  quite  a  wide  net- 
work of  roads  by  some  forty  per  cent.  Within  fifteen 
months,  according  to  the  reports,  the  traflSc  increased  by 


344  THE    COST    OF    COMPETITION 

several  hundred  per  cent.  That  is  to  say,  instead  of  the 
ratio  of  increase  being  one  hundred  divided  by  sixty,  or 
five-thirds,  as  would  have  been  the  case  were  there  a  fixed 
volume  of  purchasing-power  which  could  increase  the 
extent  of  its  purchases  only  in  inverse  proportion  to  the 
price,  it  was  several  full  fold,  indicating  a  marked  increase 
in  purchasing-power.  That  all  of  this  increase  in  purchas- 
ing-power came  from  the  Increased  circulation  of  the  com- 
munity cannot  be  proven.  But  it  is  altogether  likely,  and 
its  obverse  is  equally  unlikely. 

There  are  other  similar  instances,  chiefly  in  the  postal 
service.  Indeed,  the  original  plan  for  penny  postage  in 
England  was  strenuously  opposed  in  Parliament  for  the 
reason,  among  others,  that  the  London  post-ofiice  would 
not  be  able  to  handle  the  resultant  enormous  volume  of 
traffic !  It  would  be  surprising  if  a  similar  argument  were 
not  urged  against  the  present  proposition, — probably  by 
those  who  are  urging  at  the  same  time  that  If  we  shut 
down  upon  all  the  barter  in  the  land  there  will  be  nothing 
for  the  discharged  barterers  and  their  clerks  to  do!  But 
none  of  these  single  Instances  can  be  regarded  as  proofs. 
Foreign  factors  insist  upon  entering  the  Investigation.  The 
only  safe  guide,  as  In  all  other  scientific  observation.  Is  a 
careful  and  repeated  analysis  of  the  situation,  to  the  elim- 
ination of  the  foreign  factors  by  mutual  cancellation. 

It  may  be  said,  In  reply  to  all  of  this,  that  this  seventy 
per  cent,  prospective  drop  In  prices  has  not  yet  been  and 
cannot  be  accomplished.  If  so,  that  reverts  the  argument 
to  page  one.  It  Is  at  any  rate  a  great  deal  to  have 
accomplished  the  admission  of  the  fact  that  the  seventy 
per  cent,  or  more  Is  there  awaiting  our  grasp.  When  one 
glances  over  the  vast  field  of  current  strenuous  discussion 
of  shop-costs,  glorifying  every  little  casual  advance,  offer- 


SUPPLY   AND    DEMAND  345 

ing  millions  for  a  gain  of  five  per  cent,  in  a  single  industry, 
and  with  each  additional  five  per  cent,  growing  harder 
and  harder  to  get,  like  a  mine  getting  deeper  and  deeper, 
— in  the  face  of  all  this  the  establishment  of  the  fact  that 
here  lies  an  untouched  seventy  per  cent,  open  to  public 
occupation,  must  be  considered  a  satisfactory  accomplish- 
ment for  this  First  Part,  for  this  bare  analysis  of  Economic 
Cost.  In  the  Second  Part,  concerning  itself  with  the  ethics 
of  the  case  and  with  what  may  be  reasonably  expected  to 
occur  should  the  saving  of  the  seventy  per  cent,  or  even 
any  fair  portion  of  it,  be  actually  accomplished,  argument 
will  ultimately  be  resumed  at  this  point.^  The  preceding 
analysis  of  the  trend  of  economic  events  in  the  past  will 
then  be  made  the  basis  for  a  prediction  of  their  natural 
trend  in  the  future. 

In  deference  to  a  widely  prevalent  suspicion,  however, 
that  neither  sentiment,  moral  principle  nor  even  intellectual 
prediction  may  wisely  be  relied  upon  as  a  guide  in  public 
action,  it  has  been  deemed  best  to  draw  at  this  point  as 
sharp  a  line  as  possible  between  fact  and  theory.  What 
precedes  this  division  of  the  work  is  Fact,  a  half-century 
of  fact  accomplished  by  the  nation's  past  activity  and 
graven  into  her  history  and  her  destiny  beyond  human 
question  or  recall.  If  its  aspect  seem  novel  it  is  solely 
because  its  portraiture  has  been  drawn  along  lines  of  force 
which  have  hitherto  been  overlooked,  but  which  have  been 
none  the  less  existent  and  active.  The  lesson  for  present 
and  future  conduct  of  public  affairs  which  is  to  be  drawn 
therefrom  is  here  left  to  each  individual  reader,  for  choice 
accordingly  as  his  individual  conscience  and  reason  may 
dictate.  If  he  wishes  a  suggestion  as  to  what  must  con- 
stitute rational  conclusions  in  that  direction,  it  will  be  found 
in  the  succeeding  pages  of  the  Second  Part.      But  the  main 

5  See  page  530, 


346  THE    COST    OF    COMPETITION 

object  of  the  work :  to  reveal  to  each  citizen  the  true  eco- 
nomic nature  of  his  own  activities,  of  the  relations  which 
he  maintains  by  law  with  his  fellows  and  of  their  inevit- 
able effects  upon  the  character  and  the  destiny  of  the 
aggregation  of  human  souls  of  which  he  is  an  inseparable 
and  an  essential  part,  has  now  been  accomplished.  In 
thus  placing  upon  his  shoulders  the  fullest  liberty  and  re- 
sponsibility for  a  wise  and  safe  decision  therefrom  must 
constitute  the  nation's  sole  trust  for  her  future  safety  and 
happiness.  The  event  thereof — national  prosperity  or 
poverty,  honor  or  degradation,  life  or  death  even — "  will 
lie  in  the  hand  of  God." 


PART    II 

The  Ethical  Cost  of  Competition  and  the  Future 


"  There  exists  in  the  economy  and  course  of  nature  an  indissolubk  union 
between  virtue  and  happiness,  between  duty  and  advantage,  between  the 
genuine  maxims  of  an  honest  and  magnanimous  policy  and  the  solid 
rewards  of  public  prosperity  and  felicity." — Washington, 


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PREFATORY 

IN  the  ensuing  discussion  of  the  ethical  side  of  the  com- 
petitive system  It  has  been  seen  fit  to  make  the 
approach  by  way  of  the  economic  side.  It  has  been 
demonstrated  in  an  exact  way,  from  premises  which  were 
none  too  altruistic,  that  the  presence  of  competition 
involves  and  entails  certain  economic  conditions  which  are 
universally  admitted  to  result  in  evil  social  and  ethical 
conditions.  In  passing  from  the  conclusion  of  such  an 
economic  argument  into  purely  ethical  considerations  the 
inference  might  be  drawn  that  it  was  the  main  lesson  of 
the  book  that  the  former  were  to  be  considered  as  the 
foundation  and  the  latter  as  the  superstructure.  Such, 
however,  Is  not  the  author's  aim. 

Upon  this  point  of  priority,  whether  economics  be  the 
cause  of  ethics  or  ethics  be  the  guide  of  economics,  there 
Is  wide  disagreement.  There  is  a  certain  minority  school 
of  writers  and  thinkers  who  undoubtedly  attribute  too 
great  an  essentiality  to  forces  purely  economic  and 
too  little  to  forces  generally  admitted  to  be  purely 
ethical. 

This  school  includes  the  Marxian  socialists,  who  are  per- 
haps its  typical  representatives.  But  it  is  altogether  prob- 
able that  the  great  majority  of  the  educated,  though  not 
professionally  scientific,  world  makes  Its  mistake  In  the 
opposite  direction.  It  attributes  too  much  power  to  the 
influences  of  religion,   education   and  example  upon   the 

349 


350  THE    COST    OF   COMPETITION 

Individual  and  too  little  to  the  coercive  effect  of  economic 
and  institutional  environment. 

Into  this  question  it  is  not  the  author's  present  purpose 
to  enter.  The  problem  too  much  lacks  in  definition,  the 
form  in  which  it  presents  itself  in  each  individual  brain  is 
too  diverse,  to  permit  its  being  definitely  settled  before  the 
reading  public  and  then  used  as  an  aid  in  further  construc- 
tive thought.  However,  two  general  considerations  must 
be  pointed  out  before  the  ethical  aspect  of  our  existing 
industrial  situation  is  laid  before  the  reader,  for  his  absorp- 
tion by  whatever  method  of  approach  he  pleases.  One  of 
these  two  considerations  is  addressed  to  each  of  the  two 
aforementioned   schools   respectively. 

First,  in  considering  the  ethical  effect  of  economic 
forces,  care  needs  to  be  taken  to  realize  the  rigid  certainty 
of  those  effects.  The  situations  are  so  complex,  there  is 
such  a  multitude  of  forces  and  reactions  entering  into  each 
of  them,  the  relation  between  community-interest  and  the 
individual  presents  such  an  indefinable  mystery,  that  none 
but  the  skilled  may  hope  to  clearly  and  accurately  trace 
the  line  between  cause  and  efi^ect. 

For  this  reason  it  would  seem  axiomatic  that  the  first 
essential  to  preparation  for  the  study  of  social  ethics 
should  consist  in  acquiring  a  thorough  grasp  of  the  fun- 
damental laws  which  define  the  relations  between  cause 
and  effect,  force  and  reaction,  latent  potentiality  and 
visible  activity. 

For  instance,  the  study  of  mechanics,  from  Newton's 
elementary  laws  of  motion  to  the  latest  developments  of 
the  science  of  energetics,  must  be  absorbed  and  digested 
by  the  student  before  he  can  truly  comprehend  the 
activity  of  the  locomotive  engine.  Why  is  it  then  that 
the  study  of  that  inconceivably  more  complex  but  quite 
artificial   machine,   the  body  politic,   which  was  built  by 


PREFATORY  351 

and  is  maintained  for  the  same  processes  and  purposes 
as  the  locomotive,  namely,  the  transformation  of  energy, 
is  attempted  in  our  best  universities  without  any  such 
previous  training?  The  student  is  given  no  thorough, 
fundamental  grasp  of  natural  law  and  of  its  manifesta- 
tion in  cause  and  effect,  by  years  of  experimental  study 
of  the  natural  sciences.  Instead,  he  is  first  given,  as  his 
groundwork,  no  end  of  history.  That  is  good;  the 
engineering  student  also  gets  his  history  of  engineering. 
He  is  next  given  his  studies  in  form  of  government.  The 
parallel  In  the  engineering  course  Is  the  study  of  mechan- 
isms, a  familiarization  with  the  tools  which  have  been 
devised  in  the  past  and  are  used  more  or  less  at  present. 
The  sociological  pupil  gets  his  science  of  statistics;  that 
Is  his  sociological  laboratory-training.  The  rest  of  his 
course  Is  much  the  same :  a  further  accumulation  of  facts 
and  data,  as  raw  material. 

From  this  training  the  average  man  comes  inevitably 
to  regard  the  social  structure  as  Mr.  Spencer  regards  It: 
as  a  question  of  statics.  He  looks  upon  It  much  as  an 
intelligent  South  Sea  islander  might  look  upon  a  loco- 
motive standing  dead  and  cold  upon  a  sidetrack:  as  a 
beautiful  and  complex  structure,  worthy  of  exhaustive 
and  analytical  observation,  but  viewed  with  no  concep- 
tion whatever  of  Its  real  purpose,  of  Its  tremendous 
potentiality  for  speed  and  power  when  once  given  life 
by  fire;  of  Its  possibilities  for  creative  good  when  wisely 
guided,  of  its  Inevitable  destructlveness  of  self  and  others 
when  carelessly  or  Ignorantly  driven. 

To  obtain  this  Insight  the  student  needs  long  training 
In  the  principles  of  mechanics  and  energetics.  He  must 
not  be  so  entirely  lacking  as  at  present  is  the  case  in  the 
fundamental  conceptions  of  mass  and  velocity,  of  force 
and  distance,  of  motion  and  of  energy,  of  the  potentiality 


352  THE    COST    OF    COMPETITION 

for  motion  of  the  latent  forms  of  energy,  of  the  source 
and  of  the  destination  alike  of  all  visible  activity. 

It  is  a  widespread  lack  of  these  conceptions  which 
makes  the  argument  from  economics  to  ethics  so  danger- 
ous in  sociological  work.  But  to  those  who  would 
follow  it,  regardlessly,  elementary  preparation  to  the 
extent  of  the  following  two  points  must  be  insisted 
upon : 

First. — That  when  a  force  acts  upon  a  body  it  pro- 
duces the  same  invariable  effect,  in  the  way  of  visible 
motion,  no  matter  how  many  other  forces  may  be  acting 
upon  it  at  the  same  time.  Thus,  few  people  have 
escaped,  in  their  high-school  study  of  physics,  the  fact 
that  a  ball  fired  from  a  horizontal  gun  drops  to  the  earth 
as  quickly  as  if  it  were  dropped  from  the  hand;  but  few 
also  have  grasped  the  fact  that  the  same  law,  expressed 
in  the  same  mathematical  formulas,  also  gives  the  motion 
of  the  ball,  under  the  two  combined  forces,  when  the 
muzzle  is  aimed  vertically  upwards  or  in  any  other 
direction. 

The  application  of  this  simile  to  sociology  lies  in  the 
fact  that  the  resultant  of  competitive  economic  forces  is 
always  downwards.  There  may  be  many  other  forces 
driving  upwards,  downwards  or  horizontally.  Heredity, 
education,  religion,  patriotism,  emulation,  domestic 
affection  or,  most  important  of  all,  the  as  yet  undefined 
force  of  natural  physical  growth,  are  all  operative  and 
effective  in  upward  directions.  But  this  fact  concerns 
not  at  all  our  main  proposition,  which  is :  That  whether 
the  presence  or  the  lack  of  any  or  all  of  these  forces  be 
impelling  an  individual  in  what  direction  you  please,  if 
it  be  once  established  that  the  force  of  economic  com- 
petition trends  downwardly,  that  individual,  because  of 
its  presence,  will  rise  more  slowly  and  not  so  far  if  ris- 


PREFATORY  353 

ing,  he  will  fall  more  rapidly  and  irretrievably  if  already 
falling,  or  will  start  into  degeneration  if  otherwise  tend- 
ing to  be  stationary. 

Second. — That  potential  energy  is  always  invisible. 
It  needs  only  a  suggestion  to  point  out  that  the  engineer 
who,  lacking  a  proper  gauge,  should  await  the  explosion 
of  his  boiler  to  determine  whether  the  pressure  within  It 
were  rising  would  thereby  prove  himself  utterly  Incom- 
petent. Yet  the  great  bulk  of  men  of  not  only  business 
and  science,  but  even  of  politics,  when  regarding  ques- 
tions of  economics  and  politics,  await  with  the  utmost 
complaisance  the  daily  newspaper's  report  of  what  has 
happened  In  order  to  know  what  is  going  to  happen. 
They  will  buy  five  such  sheets  daily.  Yet,  when  a 
Fashoda  incident  arises  they  say  confidently,  "War!" 
and  proceed  to  sell  securities.  When  a  Cuban-Spanish 
war-cloud  bursts,  after  a  generation  of  steady  gathering 
to  one  inevitable  end,  they  call  it  a  bolt  from  the  blue. 
The  ability  to  predict,  the  first  test  of  all  scientific 
thought,  appears  to  be  totally  lacking  In  the  great 
majority  of  the  country's  prominent  men  of  commerce, 
journalism   and  public  office. 

Indeed,  this  ability  to  predict  political  events  is  not 
generally  expected.  Its  absence  is  not  rebuked.  The 
inability  to  gauge  properly  the  invisible  accumulation  of 
ethical,  political  and  economic  potentiality  In  the  com- 
mon people  Is  so  widespread,  even  among  Intelligent 
people,  that  the  great  public  mistakes  which  are  made 
for  lack  of  It  are  charged  against  their  doers  not  as  faults 
of  Intellectual  training,  but  as  errors  of  innate  judgment. 

With  lacks  such  as  these,  to  enter  the  ethical  field 
from  that  of  economics  is  also  perilous. 

The  second  of  the  considerations  referred  to,  which 


354  THE    COST   OF   COMPETITION 

was  to  be  addressed  to  the  opposite  school  of  thought, 
to  the  school  which  relies  upon  ethical  forces  as  the  sole 
propulsive  guide  of  human  affairs,  is  this: 

In  drawing  inferences  as  to  ethical  results  from  purely 
ethical  premises  alone,  details  must  be  excluded.  We 
have  no  exact  measure  of  ethical  forces,  as  we  have  of 
mechanical  ones,  nor  even  approximate  measures,  as  we 
have  for  economic  forces.  When  the  quantities  involved 
are  small  the  analyst  may  easily  become  deceived,  not 
only  as  to  their  exact  amount,  but  even  as  to  their  direc- 
tion, whether  positive  or  negative.  It  is  only  when  the 
ethical  forces  at  play  become,  from  their  size,  resolvable 
into  general  moral  principles  regarding  which  there  can 
be  no  question,  that  the  deductions  to  be  drawn  may  be 
safe. 

This  statement  brings  the  discussion  to  the  feet  of 
those  who  are  often  styled  the  sentimentalists.  There  is 
no  real  need  to  defend  the  class  to  which  the  term  is  prop- 
erly applied;  indeed,  it  rather  deserves  aid  and  coun- 
tenance. If  the  sentiment  be  false  (or  narrow,  which  is 
the  same  thing),  not  based  upon  the  greatest  good  of 
the  entire  race,  then  the  term  is  justly  one  of  oppro- 
brium. But  if  the  sentiment  be  wholesome,  in  the  literal 
sense  of  the  word,  the  discussion  has  now  first  found  its 
truly  stable  foundation. 

A  recent  brief  outline  of  the  history  of  the  past  nine- 
teen hundred  years,  called  forth  by  the  close  of  the  pre- 
ceding century,  in  which  was  recorded  only  secular 
events,  closed  with  the  terse  paragraphic  statement  that 
in  all  those  nineteen  centuries  of  growth  toward  world- 
civilization,  the  one  most  potent  guiding  influence  had 
been  the  teachings  of  Jesus  of  Nazareth.  That  this  is 
true,  that  the  present  world-civilization  is  a  Christian 
civilization,  is  unquestionable.     It  has  been  the  coercive 


PREFATORY  355 

power  of  the  ethical  forces  set  in  motion  by  Him  who 
rebuked  all  violence,  and  who  consistently  refrained  from 
Its  expression  under  the  most  extreme  provocation,  which 
has  overcome  the  turbulence  of  the  myriads.  For  this 
reason  the  ethical  premises  upon  which  the  following 
analysis  will  be  grounded  are  those  to  be  found  in  the 
four  gospels  of  the  New  Testament. 

Again,  our  national  structure,  from  the  town-meeting 
to  the  federal  government,  is  based,  both  consciously  and 
unconsciously,  both  fundamentally  and  imperfectly,  upon 
the  broad  principle  that  all  men,  in  their  naturally 
organized  relations  with  the  community  as  a  whole,  are 
born  "  free  and  equal  "  ;  and  that  any  other  relation  of 
an  opposite  sort,  whether  organized  or  sporadic,  is 
unnatural  and  must  stunt  and  distort  the  social  organism 
and  degenerate  the  naturally  useful  individual  into  a 
social  sore. 

This  principle  of  secular  ethics  will  also  be  taken  into 
the  premises.  To  those  men  who,  albeit  often  able  to 
read,  write,  publish  and  be  read,  are  so  limited  in  under- 
standing as  to  be  unable  to  perceive  the  fundamental  dif- 
ference between  this  doctrine  of  the  equality  of  all  men  in 
the  eye  of  the  state  and  the  absurd  proposition  that  all 
men  are  alike,  or  even  equivalent,  my  word  at  the  outset 
is  that  they  cannot  possibly  agree  with  what  follows,  nor 
even  learn  from  It  Its  lesson.  But  their  quarrel  is  not 
with  my  conclusions;  it  is  with  my  premises.  The  fact 
remains  that  all  men  are  by  nature  born  free  and  equal : 
possessing  freedom  of  Initiative,  and  in  their  relation 
toward  the  Supreme  Intelligence  and  toward  the  organ- 
ized state,  equal.  The  natural,  rapid  and  wholesome 
growth  of  our  nation,  in  all  things  essential.  Is  due  to 
the  foresight  with  which  Its  fathers  founded  it  upon 
this  fundamental  natural  fact.     If  It  shall  have  developed 


356  THE    COST    OF    COMPETITION 

later  that  any  man  is  either  hampered  in  his  initiative  or 
treated  unequally  from  his  fellows  by  his  own  community, 
it  is  plainly  because  man  has  artificially  invaded  and 
broken  this  fundamentally  natural  relation  between  indi- 
vidual and  community. 

But  the  final  test  of  all  accuracy  of  deduction  is  by 
approach  from  more  than  one  direction.  The  check  thus 
established  must  stand  as  scientific  proof.  If  a  man  study- 
ing a  problem  in  taxation,  for  instance,  finds  his  conclu- 
sions disagreeing  with  the  first  law  of  energetics,  he  may 
well  hesitate.  Either  his  data  are  erroneous  or  else  his 
treatment  of  them  is  false.  But  if  he  finds  that  his  purely 
statistical  results  are  corroborated  by  the  general  laws  of 
energetics  which  underlie  all  science,  economic  and  politi- 
cal alike,  he  may  feel  reassured.  If,  finally,  these  double 
deductions  are  found  to  be  in  accord  with  the  sense  of 
moral  truth  which  has  been  handed  down  by  the  experi- 
ence of  the  ages,  the  truth  may  be  accepted  as  con- 
clusive. 

Thus,  in  the  present  case,  the  author  feels  that  the 
condemnation  of  profit-seeking  as  inherently  antagonistic 
to  the  principle  of  unselfishness,  although  here  given  a 
later  place  in  the  argument  than  was  its  condemnation 
as  inherently  ineflicient,  is  sufficient  for  all  purposes.  It 
was  sufficient  for  the  writer  himself,  in  his  first  grapple 
with  the  question,  to  convert  him  and  to  devote  him  for 
all  time  to  its  rebuke.  To  him  all  other  analyses  of  the 
main  question,  all  minor  aspects  of  its  details,  all  prog- 
ress in  the  other  sciences,  whether  economic,  biologic 
or  material,  have  come  as  mere  corroborations  of  his 
original  conclusions,  furnishing  broader  foundation  and 
better  definition;  but  they  have  not  come  as  proofs. 

Further,  the  reference  of  the  matter  to  the  secular  prin- 


PREFATORY  357 

ciples  of  equality  and  liberty,  in  his  judgment,  comes 
second  to  the  above.  The  result  must  corroborate  the 
first  conclusion;  as,  in  fact,  it  does.  Justice  and  liberty 
are  synonymous  with  unselfishness;  but  they  are  narrower 
principles,  and  the  proof  deduced  from  them  is  not  so 
stable  nor  so  permanent. 

The  discussion  in  terms  of  economic  premises,  although 
here  given  first  place  and,  because  of  its  complexity,  the 
greater  space,  should  come  third  in  the  order  of  accep- 
tance. For  economic  considerations  are  overlaid  by  the 
principles  of  public  justice,  just  as  the  latter  are  overlaid 
by  moral  instinct.  A  man  will  throw  property-considera- 
tions to  the  winds, — every  man  will,  sooner  or  later, — 
in  the  face  of  demands  in  the  name  of  justice  or  liberty. 
He  will  forego  both  justice  and  liberty,  in  their  legal 
sense,  for  the  sake  of  moral  conscience. 

The  reference  of  the  matter  to  statistical  proof  the 
writer  regards  as  the  last  and  the  weakest  method  of  all. 
His  own  statistical  cullings  have  been  Introduced  purely 
as  illustrations.  The  proof,  based  upon  the  law  of  the 
conservation  of  energy,  that  competition,  from  Its  very 
definition,  consists  of  waste,  and  that  It  must  entail 
poverty  and  overwork  In  the  form  of  the  starvation-wage, 
and  poverty  and  no  work  In  the  form  of  the  submerged 
tenth, — that  Is  the  final  word,  from  the  economic  stand- 
point. To  make  the  statement  concrete  and  to  gain  some 
idea  of  magnitudes  the  curves  and  statistics  were  intro- 
duced. They  were  drawn  neither  skillfully  nor  exhaus- 
tively. But,  supposing  them  to  be  In  error,  neither  the 
skill  of  the  specialist  nor  the  patience  of  the  devotee  may 
ever  hope  to  extract  from  statistical  sources  commensu- 
rate rebuttal  to  the  proposition,  proven  alike  from  con- 
siderations of  morality,  justice  and  public  economy,  that 
competition,   that  mere  profit-seeking  itself,  without  any 


358  THE    COST    OF    COMPETITION 

regard  to  whether  the  profit  attained  be  exorbitant  or 
moderate  or  nothing  at  all,  is  an  inherently  evil  thing,  an 
institution  to  be  purged  from  our  body  politic  by  every 
effort,  religious,  educational  or  political,  which  the  inge- 
nuity of  the  conscientious  citizen  may  be  able  to  devise  or 
his  strength  and  courage  be  able  to  exert. 


II 

THE  ETHICAL  NATURE  OF  BARTER 

IT  is  of  the  first  importance,  in  understanding  the 
inherent  nature  of  barter,  to  recall  that  its  origin 
dates  back  before  the  dawn  of  history.  In  man's 
progress  upward  from  the  brute  level  of  existence  it  is 
difficult  to  say  just  what  institution  first  differentiated  him 
from  the  beasts.  It  cannot  be  domesticity,  for  many  of 
the  higher  mammals  exhibit  forms  of  family-life  of  a  far 
purer  sort  than  those  existent  in  the  earlier  stages  of 
human  development  of  which  we  have  fairly  exact  record, 
when  polygamy  and  polyandry  were  the  accepted  foun- 
dations of  society.  In  fact,  the  perfectly  developed  monog- 
amous family  is  a  human  institution  which  has  appeared 
at  a  comparatively  late  date  in  the  evolution  of  the  social 
organism. 

Nor  can  this  first  distinctive  institution  be  gregarious- 
ness,  the  first  community  of  interests  consisting  of  the 
military  tribe  formed  for  the  purposes  of  mutual  defense; 
for  many  of  the  beasts  also  possess  that. 

In  the  use  of  tools  appears  a  clue  as  to  man's  first 
departure  from  a  purely  animal  life.  But  there  are 
undoubted  instances  of  the  use  of  material  objects  by  birds 
and  beasts,  in  the  building  of  their  nests  and  the  capture 
of  their  prey,  which  come  very  closely  to  trespass  upon 
this  field  as  a  prerogative  belonging  purely  to  man.  More- 
over, the  man  and  the  tool  in  combination  do  not  con- 
stitute   an    element    of    society.     The    use    of    tools    is 

359 


36o  THE    COST    OF    COMPETITION 

undoubtedly  the  primitive  industrial  phenomenon,  and  it 
is  interesting  to  note  that  it  extends  back  into  brute  exist- 
ence. But  the  primitive  social  economic  phenomenon 
must  have  included  at  least  two  individuals  and  have  con- 
sisted of  the  relationship  existent  between  them.  This  is 
discernible  with  certainty  only  when  Exchange  first  makes 
its  appearance. 

Here,  indeed,  seems  to  be  the  primordial  social  element. 
When  two  producers  of  value,  whether  tool-users  or  not, 
Interchange  their  accumulations  of  wealth  there  arises  for 
the  first  time  those  phenomena  of  Specialization  and 
Coordination  in  Exchange  which  have  since  become  mag- 
nified and  complicated  by  mere  reduplication  until  they 
now  constitute  all  that  we  possess  which  can  be  defined 
as  The  State. 

So  far  as  knowledge  now  extends,  exchange  was  accom- 
panied from  the  first  by  barter.  How  far  back  is  the 
origin  of  both  it  Is  impossible  to  say,  but  certain  It  Is  that 
both  are  exceedingly  primitive.  In  the  beginning  there 
must  have  been  a  very  much  greater  proportion  of  barter 
visible  In  each  retail  transaction  than  there  is  now.  This 
Is  still  true  of  the  oriental  and  other  economically  more 
primitive  countries.  For  the  modern  occidental  expan- 
sion of  barter  has  taken  the  less  visible  form  of  internal 
organization,  and  of  complex  and  costly  preparation  of 
armament  and  position  preliminary  to  the  actual  trial 
of  strength  between  the  parties  to  negotiation.  In  fact, 
barter  and  exchange  could  together  come  Into  existence 
only  when  the  brutal  antagonism  natural  between  all 
individuals  In  primitive  existence  first  became  so  disarmed 
by  intelligence,  acting  perhaps  through  a  species  of  police- 
force  of  public  opinion  or  of  enlightened  despotism,  as  to 
eliminate  extreme  physical  violence  from  the  intercourse 
between  individuals.     There  must  have  been  a  more  or 


THE    ETHICAL    NATURE    OF    BARTER       361 

less  forced  armistice,  at  least,  between  the  negotiating 
parties.  But  between  the  degree  of  violence  which 
characterizes  the  exchange  as  robbery,  or,  more  mildly, 
as  extortion,  and  that  which  permits  it  to  be  called  pure 
barter  there  is  absolutely  no  stable  or  distinct  line  to  be 
drawn.  All  that  is  necessary,  in  order  that  barter  may 
exist,  is  that  the  world  shall  stand  by  and  see  fair  play. 
It  does  so,  giving  a  fair  field  with  no  favor,  for  all  the 
figurative  kicks  and  blows  between  combatants  which  they 
care  to  give  or  take.  There  is  no  other  institution  which 
in  its  history  brings  into  such  high  light  the  Anglo-Saxon 
love  of  fair  play  in  a  square  fight  as  does  the  attitude  of 
the  state  toward  barter,  from  the  most  primitive  sort 
down  to  the  commercialism  of  the  present  hour.  The 
excessive  brutalities  of  primitive  passion,  so  far  as  they 
are  visible  in  the  actual  negotiation,  have  of  course  been 
modified  by  the  advance  of  public  opinion,  as  have  those 
of  singlestick  and  boxing;  they  have  also  been  somewhat 
modified  by  law.  Direct  physical  violence  between  indi- 
viduals, involving  visible  injury,  mutilation  or  loss  of 
life,  is  quite  prohibited;  but  it  is  altogether  an  open  ques- 
tion as  to  how  successfully  true  cruelty  and  invisible  man- 
slaughter has  been  eliminated  thereby. 

There  is  no  possibility  of  disguising  the  fact  that  barter 
is  nothing  more  than  a  balance  of  forces  between  the  two 
contending  parties.  It  is  essential  to  a  clear  understand- 
ing of  current  economic  action  that  this  point  be  empha- 
sized. The  two  or  more  negotiating  parties  meet  and 
oppose  forces.  The  balance  of  force  determines  the  price. 
Violence  of  muscle  or  brawn,  or  with  warl'ke  weapon,  is 
of  course  excluded;  but  of  violence  of  spirit,  manifested  in 
any  way  not  illegal,  or  at  least  detectable,  there  is  plenty. 
The  violence  of  intimidation,  or  even  of  actual  injury  or 
loss  of  life,  if  accomplished  by  the  less  visible  weapons 


362  THE    COST    OF    COMPETITION 

of  legal  economic  advantage,  may  be  used  within  the  nego- 
tiation, directed  apparently  solely  toward  effect  upon  the 
price  accepted  though  actually  toward  the  welfare  of  the 
opposing  individual,  without  depriving  the  negotiation 
of  the  characteristics  of  legal  barter.  Violence  of  the 
cudgel  and  shot-gun  order  cannot  be  kept  out  of  considera- 
tion, when  once  the  other  is  permitted  to  enter.  It  will 
occur  occasionally;  on  the  part  of  labor,  for  instance, 
when  the  legally  permitted  oppression  by  means  of 
organized  barter  and  capitalism  has  driven  indignant 
human  nature  to  reply  with  what  means  it  possesses;  its 
utter  futility  having  nothing  to  do  with  the  naturalness  of 
the  outburst  of  repressed  life.  But  this  is  not  ordinarily 
considered  a  part,  although  in  nature  it  is  so,  of  barter. 
But  of  what  is  universally  admitted  to  be  nothing  else 
than  barter,  on  the  part  of  the  highest  in  the  land,  a  large 
portion  is  unquestionable  violence:  of  violence  of  the 
Pilate  sort,  a  quiet  disclaimer  of  responsibility  which  can- 
not be  disclaimed,  the  violence  of  restriction  of  circula- 
tion and  employment  and  purchasing-power  by  cost  of 
barter,  the  violence  of  indifference  to  the  pressure  upon 
others  of  life  and  death,  of  love  and  pain,  of  hunger  and 
the  lack  of  opportunity  to  work,  of  dire  need  in  the  face 
of  extortionate  prices.  The  daily  newspapers  reveal 
enough  of  it  to  turn  the  heart  sick.  Still  more  true  is  it 
that  the  mere  fear  of  violence,  without  the  actuality,  not 
only  may  be  but  nearly  always  is  an  active  factor  in  deter- 
mining the  price, — which  shows  the  narrow  usefulness  of 
laws  against  actual  physical  violence  in  such  transactions. 
All  this  is  less  true  of  barter  for  goods  than  it  is  of  bar- 
ter over  the  price  of  labor.  In  the  barter  over  goods  the 
pressure  is  not  nearly  so  evident,  but  it  is  there  neverthe- 
less; the  competitive  policy  of  "charging  all  the  traffic 
will  bear,"  when  applied  to  the  staple  necessaries  of  life, 


THE    ETHICAL    NATURE    OF    BARTER       363 

means  nothing  less  than  putting  up  the  price  until  the  con- 
sequent decrease  in  the  expansion  of  population,  visible 
in  decreasing  purchases,  warns  the  profit-seekers  to  put  it 
no  higher.  The  bargainers  are  unconscious  of  this  fact, 
they  are  unaware  that  in  watching  the  market-reports  of 
the  volume  of  trade  in  wheat  and  beef  and  ice  they  are 
gauging  the  relative  activities  of  the  angels  of  Life  and 
Death,  but  it  is  true  nevertheless.  Every  fluctuation  in 
price  of  commodities,  every  variation  in  price  or  demand 
for  labor,  constitutes  bodily  violence.  In  the  form  of 
bodily  discomfort,  pain,  want,  the  congestion  of  habitat 
until  tuberculosis  becomes  epidemic,  the  reduction  of  diet 
and  clothing  until  pneumonia  is  rife,  while  malnutrition 
aids  a  whole  series  of  other  diseases  to  swell  the  list,  of 
overwork  until  rheumatism  claims  those  who  do  not  turn 
insane  or  criminal,  of  limited  supply  of  milk  and  ice  in 
summer  until  the  babies  die  like  flies,  of  all  sorts  of 
physical  suffering  to  the  point  of  life  and  death,  of  moral 
suffering  to  the  extreme  that  social  degradation  can 
express, — in  all  these  forms  barter  can  and  does  include 
the  worst  imaginable  violence  to  humanity.  It  is  partly 
the  daily  familiarity  of  these  phenomena  and  partly  the 
difficulty  of  clearly  tracing  cause  and  effect  in  the  com- 
plexity of  the  present  economic  system  which  alone  shields 
them  from  that  outburst  of  public  indignation  against  them 
which  would  otherwise  be  inevitable,  and  which  saves  the 
consciences  of  those  active  in  promoting  these  conditions. 
It  is  only  natural  and  inevitable  that  such  violent 
anarchy  as  this  in  our  economic  system, — its  very  founda- 
tion, in  fact,  upheld  and  defended  by  public  opinion  and 
the  law, — should  breed  an  even  wider  moral  and  intel- 
lectual anarchy  in  the  individual,  in  the  shape  of  crime, 
insanity,  labor-tyranny,  official  corruption,  prostitution 
and  nihilism.     It  is  an  all  too  axiomatic  fact  that  all  of 


364  THE    COST    OF    COMPETITION 

the  anarchy  which  constitutes  "  the  social  question  "  of 
the  day  is  due  to  the  exercise  by  the  stronger  party  to  bar- 
ter of  every  sort  of  physical  superiority  over  the  weaker 
other  than  the  purely  muscular, — both  that  of  personality 
and  that  of  position.  The  cunning  use  of  passive  decep- 
tion, the  more  active  pressure  of  fear  of  unemployment, 
the  cold-blooded  utilization  of  the  stress  of  want  combined 
with  domestic  affection:  the  marshaling  upon  one  side  of 
all  the  power  that  millions  of  capital  can  command 
against  individual  and  often  feminine  powers  of  resist- 
ance upon  the  other, — all  these  are  accepted  accompani- 
ments of  everyday  bargaining.  It  is  an  unmitigated, 
though  usually  disguised,  balance  of  pure  force  and 
endurance.  There  is  no  need  to  refer,  in  addition,  to 
those  less  frequently  revealed  though  well  authenticated 
situations  in  which  the  most  sacred  impulses  of  the  human 
heart, — parental  affection  struggling  with  the  temptations 
offered  to  child-labor,  manly  honor  standing  against 
bribery  into  disloyalty,  and  feminine  chastity  face  to  face 
with  economic  dependence  and  dire  want, — are  laid  under 
stress  in  the  cutting  down  of  costs  and  the  forcing  of  a 
good  bargain. 

Of  the  individual  moral  responsibility  of  those  who 
engage  in  the  great  game  of  barter,  of  the  weight  of 
blame  which  should  attach  to  their  free  activity  in  it,  It  is 
not  the  purpose  here  to  speak.  Of  men  and  motives  we 
are  not  to  be  the  self-constituted  judges,  but  merely  of 
institutions.  For  tremendous  wrong-doing  every  man 
who  upholds  the  competitive  system  is  certainly  respon- 
sible. Of  the  measure  of  guilt  to  be  charged  against  him 
therefor  let  his  God  and  the  light  which  may  have  pene- 
trated his  soul  alone  sit  in  sentence  upon  him.  The  great 
majority   of   employers,    particularly   those   of   moderate 


THE    ETHICAL    NATURE    OF    BARTER        365 

scale,  are  striving  earnestly  and  unselfishly,  although 
blindly  and  in  vain,  to  mitigate  for  their  employees  the 
hard  lot  which  fate  has  thrust  upon  them.  I  know  this 
too  well  to  have  one  syllable  of  bitter  and  unjust  invective 
to  send  against  them,  as  employers.  But  as  citizens, 
voters,  talkers,  writers,  as  men  who  should  not  be  afraid 
to  stand  for  the  forlorn  hope  which  they  believe  to  be 
right,  a  dire  weight  of  denunciation  might  justly  be 
launched  against  them  for  recusancy, — were  they  only  a 
little  wiser.  As  for  those  who  see  more  clearly  what  they 
are  doing,  who  are  able  to  perceive  how  far  and  wide  and 
deep,  hydraulic  fashion,  spreads  the  pressure  of  a  single 
keen  bargain  struck,  until  what  nets  its  originator  a  mere 
thousand,  spent  in  a  fortnight,  lops  off  from  a  million  con- 
sumers a  tithe  of  their  meager  income  each,  drops  one 
more  shuddering  soul  from  the  ranks  of  respectability 
into  The  Submerged  Tenth, — of  these  individuals  and 
their  consciences,  when  they  continue  in  their  barter  and 
its  defense,  it  were  as  well  not  to  speak. 

But  of  the  institution  as  a  whole,  for  the  perpetuation 
of  which  every  citizen  is  equally  responsible,  there  is  no 
reason  for  mincing  phrases.  There  need  not  be  the  least 
hesitation  in  saying  that,  of  all  the  things  in  our  present 
civilization  which  can  be  included  under  a  single  name, 
for  unmitigated  wholesale  cruelty  of  concept  and  for 
moral  depravity  of  result,  commercial  competition  stands 
out  the  unquestioned  leader. 

If  this  statement  be  doubted,  tell  me  what  other  can 
compare  with  it?  Is  it  murder,  or  allied  physical  violence? 
How  many  victims  does  that  reach  in  a  year?  Not  one- 
tenth  of  one  per  cent,  of  those  affected  by  barter.  How 
far  beyond  itself,  out  of  sight  in  the  intricacies  of  the 
social  conformation,  do  the  direct  results  of  the  iniquity 
of  murder  extend?     Scarcely  at  all.     Finally,  how  much 


366  THE    COST    OF    COMPETITION 

of  it  is  a  mere  symptom,  a  direct  result,  a  natural  fruit, 
of  competitive  activity?    Almost  all  of  it. 

Is  it  the  prize-ring,  its  nearest  of  kin?  That  cannot 
compare  with  it  for  brutality.  In  the  prize-ring  equality 
of  opportunity  and  of  doubt  as  to  the  issue  is  carefully 
preserved,  so  that  both  parties  may  enter  the  contest 
willingly,  even  joyfully.  Marquis  of  Queensberry  rules 
pit  carefully  man  against  man,  pound  of  brawn  against 
pound  of  muscle,  each  man  restricted  to  contest  within  his 
proper  class.  Seconds,  sponges  and  surgeons  are  at  hand, 
and  care  is  exercised  that  the  loser  gets  no  more  "  punish- 
ment "  than  is  necessa.ry.  Only  the  principals  get  hurt, 
and  ten  days'  time  heals  their  wounds.  The  community 
loses  in  the  o-peration  only  through  indirect,  unmeasurable 
demoralization. 

But  in  commercial  competition  where  are  all  these 
humane  precautions  against  injustice  and  extreme  injury? 
Where  is  the  spirit  of  fairness  which  places  upon  the  prin- 
cipalis the  pain  of  their  misdeeds  and  preserves  to  each 
an  equal  chance  to  win  out?  Where  is  the  spirit  of  man- 
liness which  refuses  to  fight  except  one's  opponent  be  one's 
equal,  in  sex,  weight  and  years?  There,  indeed,  the 
fight  is  deliberately  made  as  unfair  as  possible,  is  carefully 
restricted  to  one  between  the  powerful  and  the  weak, 
between  the  "  successful  "  and  the  "  improvident," — 
as  between  a  corps  of  gladiators  in*  the  arena,  prudently 
provided  with  sword  and  shield,  against  a  huddled  mob 
of  naked  savages  or  of  non-resistant  Christians.  On 
'Change,  when  railroads  or  steel  or  coal  or  beef  or  "  the 
industrials  "  are  bulled  or  beared,  in  the  directors'  offices, 
when  combines,  pools  and  agreements  are  effected,  when 
prices  are  "  established,"  when  lock-outs  are  "  decreed  " 
or  production  "  regulated,"  by  men  in  the  prime  of  life, 
fed  with  five-dollar  luncheons,  backed  by  ample  capital, 


THE    ETHICAL    NATURE    OF    BARTER       367 

the  reactionary  weight  of  the  "  piles  "  they  make  falls 
upon  no  trained  coequals;  not  upon  individual  opponents, 
sturdy  men  like  themselves,  but  upon  the  helpless  unamal- 
gamated  millions,  the  muttering  men  without  capital, 
the  weeping  women,  the  wailing  children.  Here  is  no 
free  nobility  of  savage  hunter  versus  savage  fisherman, 
fighting  it  out  in  the  untamed  wilds;  here  is  unmitigated 
selfishness  and  cowardice,  the  shooting  of  robins  from 
comfortable  cover. 

There  is  much  sentiment  abroad  just  now  against  the 
legal  permission  of  prize-fighting.  In  these  pages  will  be 
found  no  intimation  that  this  sentiment  is  not  good, 
that  there  might  not  better  be  more  of  it.  But  in 
the  name  of  all  consistency,  if  we  are  going  to  condemn 
legalized  brutality,  as  demoralizing  to  any  extent,  let  us 
condemn  all  of  it,  beginning  with  the  most  flagrant  and 
disastrous  first.  And  certain  I  am  that  from  the  bald 
a.ccounts  of  the  brutal  doings  of  the  barterers  which  reach 
me  in  the  daily  press, — of  the  extortion,  the  vulgar  luxury 
and  the  false  standards  of  the  rich,  of  the  turbulence,  the 
suicides,  the  frenzy  and  the  depression  of  both  poor  and 
rich  which  follow  in  its  wake,  the  sensationalism  of  the 
manner  of  its  reporting  being  itself  but  a  part  of  it, — I 
can  turn  from  the  general  to  the  sporting-page  of  my 
morning-paper  and  read  an  account  of  a  clean,  fair  prize- 
fight, where  two  strong  men  stand  face  to  face  and  pummel 
each  other  into  insensibility, — if,  indeed,  the  thing  be  not 
a  money-making  farce,  degenerated  from  a  real  prize- 
fight into  a  barter  over  the  gate-receipts, — with  a  positive 
sense  of  escape  from  the  disgusting  and  the  demoralizing 
into  the  inspiration  of  a  just  and  virile,  if  brutal,  freedom. 
How,  in  the  face  of  considerations  such  as  these,  the 
organized  moral  teachers  of  the  land,  the  clergy  and  the 
editorial  press,  can  see  their  duty  as  otherwise  directed 


368  THE    COST    OF    COMPETITION 

than  against  this  most  stupendous  of  all  violent  frauds, 
is  not  to  be  understood  by  those  who  have  taken  thought. 
If  their  enlightenment  has  not  been  accomplished  by  the 
pages  which  have  preceded,  there  is  plenty  more  of  evi- 
dence to  offer  them.  By  its  fruits  the  true  nature  of  bar- 
ter can  be  known,  if  not  by  its  anatomy. 


Ill 

THE  COST  TO  THE  LOSERS 

\T  the  first  glance  any  attempt  at  a  proper  measure 
/  \  of  the  ethical  cost  of  the  competitive  struggle 
JL  jl  to  the  classes  which  lose  in  the  visible,  economic 
sense,  the  classes  of  the  starvation-wage  and  the  sub- 
merged tenth,  seems  a  hopeless  one.  It  is  not  alone  that 
we  have  no  yardstick  for  ethical  losses  or  gains.  It  is 
that  the  quantities  are  stupendous,  unimaginable,  to  be 
appreciated  by  experience  alone.  Let  one  wander  but 
briefly  where  these  classes  are  to  be  found,  not  alone  in 
the  slums,  where  he  who  runs  may  read,  but  in  the  institu- 
tional whirlpools  into  which  the  flotsam  of  social  turmoil 
is  gathered  a  while  before  it  disappears.  Let  one  but 
glance  into  the  almshouse,  the  prison,  the  hospital,  the 
lunatic  asylum  and  the  morgue.  What  visible  trace  is 
there  of  aught  ethical  except  loss,  of  simple  lack  of  ethical 
impulse  or  of  understanding  of  what  it  may  be,  of  mere 
bodily  shell  from  which  all  moral  life  has  long  since  been 
eaten  out  but  which  still  carries  the  imprint  of  God's  like- 
ness until  the  final  collapse.  That  is  sad  work,  discourag- 
ing to  most  observers.  But  it  is  not  the  saddest;  for  there 
the  struggle  is  almost  over.  For  a  while  life  continues, 
turbulent  or  passive,  as  the  chance  organism  may  dictate; 
but  the  turbulence  is  not  that  of  striving,  the  passivity  is 
not  that  of  peace.  Mere  bodily  instinct,  of  hunger,  of 
resentment,  of  aftection,  remains,  aping  in  phantom  gro- 
tesqueness  the  remembrance  of  days  when  desire  and  con- 

369 


370  THE    COST   OF   COMPETITION 

test  and  love  and  honor  were  real.  That  is  all.  It  is 
almost  always  repulsive,  sometimes  hideous;  but  it  is 
seldom  very  painful. 

But  look  further  and  more  closely,  not  where  poverty 
openly  flaunts  its  begging  needs  or  cloaks  its  shame  in  con- 
gested numbers,  but  where  it  hides  its  stern  reality  under  a 
brave  exterior.  Look  at  the  unnumbered,  unknown  mil- 
lions fighting  for  life  and  pretending  not;  counting  each 
ounce  of  strength  and  each  penny  of  cash  for  its  weight 
against,  not  always  sheer  hunger  and  cold,  but  against 
disease  and  domestic  burden,  against  that  deterioration 
which  comes  from  monotony  of  existence,  against  child- 
hood's lack  of  opportunity  or  age's  lack  of  comfort, 
against  that  loss  of  self-respect  which  comes  from  loss  of 
good  appearance  and  that  proper  pride  in  social  position 
which  the  self-satisfied  alternately  appeal  to  for  further 
stimulus  for  striving  and  condemn  as  extravagantly 
wasteful!  There  is  the  pain!  There  allot  your 
sympathy !  It  is  not  against  the  stunning  violence  of  sud- 
den death  that  we  need  to  pray,  O  Lord,  nor  against  the 
comatose  convulsions  of  virulent  disease!  It  is  for  the 
long-drawn  torture  of  life  without  growth,  the  hopeless 
leaden  pain  of  sensibility  not  yet  killed  nor  yet  permitted 
wholesome  outlet,  of  numberless  days  dragging  into 
numberless  weeks  and  months  and  years,  each  absolutely 
alike,  each  denied  the  ear-mark  of  little  triumphs  or  even 
of  signal  failure,  devoid  alike  of  the  happiness  of  love 
fed  and  of  the  pleasure  of  hate  gratified.  That  is  the 
life  which  is  worse  than  the  rack,  which  beggars  Tantalus; 
and  he  (or  she,  for  so  many  of  them  are  women,  whom 
the  strong  of  the  land  ought  to  be  proud  of  protecting) 
who  walks  its  way  without  impatience  of  spirit,  or 
sin,  or  crime,  walks  indeed  with  beautiful  feet.  They 
are   the   brave   poor   things   who   deserve   the   Victorian 


THE    COST   TO   THE    LOSERS  371 

cross.      For    It    Is    they   who    earn    the    true    starvation- 
wage.^ 

Yet  of  some  more  concrete  estimate  of  what  they  lack 
there  is  some  hope.  A  few  helpful  general  considerations 
may  be  stated  with  exactness. 

In  the  first  place,  the  problem  is  simple.  The  etJiical 
condition  of  the  losers  in  the  race  is  measured  by  their 
material  environment.  The  pressure  from  above  which 
has  forced  them  where  they  are  has  done  two  things : 

(i)  It  has  pressed  them  near  the  soil.  The  fripperies 
are  gone.  The  solemn  pretenses  of  high  life  find  neither 
food  nor  room.  Social  etiquette  is  simple  and  transpar- 
ent. The  essentials  are  laid  bare.  No  long  code  of  diplo- 
matic advance  intervenes  between  the  maiden  and  her 
lover,  between  the  assailant  and  his  victim.  Deception 
is  limited  to  sheer  lying.  Love,  hate,  devotion,  sacrifice, 
sympathy,  are  what  they  pretend  to  be.  Between  the 
Impulse  and  the  deed  lies  neither  the  safeguard  of  delay 
nor  the  curtain  of  hypocrisy.  Adult  men  and  women  art- 
much  as  little  children,  merely  of  a  larger  growth.  Life 
Is  natural  and  purely  human. 

(2)  It  has  pressed  them  Into  close  contact  with  each 
other.  They  are  promptly  cognizant  of  each  other's  needs. 
They  must  attend  to  them,  resisting  by  their  close  coordi- 
nation the  external  pressure  to  which  they  must  inevitably 
succumb  alone.  The  indifference  which  Is  the  natural 
characteristic  of  the  so-called  higher  classes,  who  are 
artificially  protected  from  attack,  here  finds  no  chance 
to  survive.  They  nurse  each  other  and  bury  each  other 
and  pay  each   other's   debts.     They  visit  each   other  in 

1"  Balzac,  in  '  Pere  Goriot,'  refers  to  the  'dramas  that  go  on  and  on.' 
Such  are  the  tragedies  of  the  unemployed,  recurring  with  monotonous 
iteration  during  every  period  of  industrial  depression."  (Mr.  Percy  Alden, 
in  Tlie  Outlook  for  May  i6,  1903.     The  entire  article  is  worth  reading.) 


372  THE    COST    OF    COMPETITION 

prison.  They  adopt  each  other's  children.  They  have 
to,  or  else  drop  into  the  submerged  tenth, — which  is  a 
longer,  more  horrid  fall  than  from  Fifth  to  Third 
Avenue.  With  them  communism  and  altruism  are  basic 
instincts.  The  portion  of  their  income  which  they  devote 
to  charity  is  in  inverse  proportion  to  its  size.  The  time 
they  spend  on  their  neighbor's  needs  is  in  direct  propor- 
tion to  the  length  of  the  working-day.  Their  women 
bear  large  families,  do  the  washing,  keep  house  without 
maids,  and  yet  find  strength  and  time  for  a  charity  of 
spirit  and  deed  which  the  ladies  of  leisure  cannot  parallel 
within  their  own  class.  Their  children  grow  up  naturally, 
in  one  sense,  although  fearfully  stunted  and  distorted  by 
lack  of  opportunity  in  another.  They  learn  no  false 
stories  from  hired  maids,  no  artifices  of  correct  deport- 
ment from  polite  boarding-schools,  no  habits  of  super- 
ficially skimming  the  appearances  from  the  realities  of 
life.  They  care  for  each  other  while  mere  tots.  They 
learn  to  maintain  their  own  from  the  start.  Their  play- 
ground is  the  crowded  sidewalk.  At  three  they  must 
respect  the  rights  of  others  or  suffer;  at  ten  manly  and 
womanly  ability  is  at  a  premium.  They  grow  up  into 
adult  citizens  who  vote  for  the  most  stalwart  candidate, 
according  to  the  standards  which  have  been  allotted  to 
them:  for  him  who  will  give  them  what  they  most  direly 
need,  a  job  and  an  occasional  picnic, — to  the  great  indig- 
nation of  those  who  have  made  money  out  of  their  child- 
hood's necessities,  out  of  their  food,  shelter,  coal,  ice, 
fresh  air  and  transportation  to  green  fields.  Only,  so 
many  of  them,  alas,  do  not  grow  up  at  all !  In  the  sum- 
mer ice  is  so  high  that  the  milk  does  not  keep;  in  winter 
coal  is  so  high  that  pneumonia  creeps  in. 

In  short,  if  the  proportion  of  altruism  to  selfishness  in 
a  man,  measured  in  terms  of  his  physical  environment  of 


THE   COST   TO   THE    LOSERS  373 

food,  shelter,  opportunity  and  inspiration,  the  ratio  of  his 
actual  altruism  to  that  theoretically  possible,  be  denoted 
as  his  "  ethical  efficiency,"  then  it  may  be  rigidly  stated 
that 

The  Average  Ethical  Efficiency  in  the  various 
economic  classes  {of  Fig.  11)  is  inversely  proportional 
to  the  height  of  their  economic  level  above  submergence. 

It  Is  plain  that  the  ethical  development  of  an  individ- 
ual cannot  possibly  exceed  his  physical  development. 
His  ethical  efficiency,  like  all  other  efficiencies,  must  ever 
be  less  than  unity.  In  the  lower  classes  the  ethical  effi- 
ciency Is  high,  but  It  is  only  because  the  complete  possi- 
bilities are  very  low.  The  submerged  individual  gets  a 
larger  share  of  the  altruism  which  is  open  to  him;  but 
there  is  so  little  that  Is  open. 

In  this  light  it  is  clear  that  those  who  lose  the  most 
economically  lose  the  least  ethically.  Physical  and  moral 
life  are  alike  crowded  to  minimum  limits;  but  whereas 
the  physical  side  of  human  nature  Is  elastic,  the  moral  Is 
not.  Without  honor  and  self-respect,  as  each  one  defines 
it  to  himself  according  to  his  light,  life  is  impossible 
except  temporarily;  and  the  lower  economic  classes  are 
not  a  temporary  institution.  Until  the  level  of  actual 
submergence  is  reached,  as  one  goes  down,  the  moral  side 
of  the  character  does  not  seem  to  suffer  at  all;  It  gains, 
in  fact.  But  the  development  of  the  aesthetic  is  com- 
pletely lacking:  which  is  probably  the  reason  why  we  find 
these  people  so  hard  to  forgive.  Let  one  frequent  the 
work-shops,  the  boarding-houses  and  the  theaters  of  the 
poor;  he  will  find  his  aesthetic  sense  trampled  upon  at 
every  step.  But  his  moral  nicety  gets  not  nearly  so  many 
affronts  as  in  polite  life.  He  will  find  a  general  sense  of 
fraternal  support  in  the  shop,  a  clumsy  effort  at  attentive 


374  THE    COST    OF    COMPETITION 

and  sympathetic  unselfishness  In  the  boarding-house  and 
a  high,  if  tawdry,  standard  of  homely  virtue  in  the  gallery 
of  the  cheap  playhouse,  which  he  may  seek  in  vain  in  the 
average  office,  hotel  or  stage  of  aristocratic  vogue.  The 
level  of  the  starvation  wage  is  the  true  foundation  and  the 
sole  reliance  for  stability  of  the  body  politic.  From  it 
may  rise  a  central  pillar  of  morality  more  cultured  to  a 
gleaming  height;  but  without  the  foundation  it  must 
totter  and  fall, — as  periodically  in  history  it  is  seen  to  do. 
It  must  be  recalled,  in  considering  this  question,  that 
the  layer  which  earns  the  starvation-wage  includes  not 
only  the  manual  wage-earners  (to  which  this  maximum 
possible  ethical  development  has  been  ascribed,  as  some 
may  think,  without  due  deliberation),  but  that  it  also 
includes  all  of  those  classes  of  society  to  which  are  admit- 
tedly accredited,  by  universal  opinion,  the  greatest  moral 
elevation.  The  clergy,  the  missionaries,  the  physicians, 
the  nurses,  the  teachers,  the  reformers,  the  inventors;  the 
writers,  the  artists,  the  musicians  and  the  architects ;  the 
firemen,  the  policemen,  the  soldiers  and  sailors,  and  the 
life-saving  crews  along  our  coast;  the  Salvation  Army 
and  the  Sisters  of  Charity:  these  are  the  classes  of  pro- 
ducers which  are  at  the  bottom  of  the  economic  pyramid 
and  in  the  van  of  our  moral  progress.  They  are  not  all 
alike.  Some  work  in  lines  very  different  from  the  others. 
Some  possess  the  economic  advantage  over  the  others 
involved  In  technical  skill.  A  few  individual  clergymen, 
teachers,  artists  and  Inventors  rise  to  an  eminence  which 
seems  to  place  them  In  economic  independence.  But  the 
explanation  of  their  differentiation  lies  In  the  word  genius: 
which  Is  not  a  try-square  by  which  the  bulk  of  the  world 
may  honestly  or  usefully  be  tested.  As  classes  they  are 
wholly  devoted  to  productive  effort,  and  therefore  the 
slaves  and  dependents  of  the  competitive  class. 


THE    COST   TO   THE    LOSERS  375 

Worse  than  this,  most  of  them  are  devoted  to  the  pro- 
duction only  of  moral  good,  for  which  there  is  no  eco- 
nomic market;  and  this  places  them  in  a  position  even 
inferior  to  the  manual  productive  classes,  which  produce 
a  material  good  for  which  there  is  an  economic  market. 
They  do  the  work  they  love  and  take  what  it  may  bring; 
and  it  brings  little :  the  least  upon  which  they  can  continue 
to  be  honest  and  altruistic  and  artistic.  They,  as  entire 
classes,  earn  the  starvation-wage  as  truly  as  do  the  mill- 
hands. 

If  these  general  statements  should  still  seem  to  be  un- 
warranted, let  us  turn  to  the  obverse  of  the  situation  and 
see  how  widely  the  immorality  of  the  country  finds  its 
expression  among  the  pecuniarily  independent,  or  at 
least  comfortable,  classes.  While  it  is  true  that  a  large 
part  of  the  nation's  recorded  crime  is  coincident  with  and 
a  result  of  submergence  below  the  starvation-wage,  yet  it 
is  also  true  that  an  almost  equally  large  portion  is  coinci- 
dent with  a  quite  opposite  character  of  circumstance,  if, 
indeed,  it  be  not  likewise  a  result  of  it.  This  latter  por- 
tion, however,  obtains  by  no  means  so  thorough  a  record 
in  the  criminal  courts;  for  there  are  a  multitude  of  ways 
whereby  turbulence  in  high  life  may  escape  criminal 
action. 

Not  to  place  all  the  odium  of  this  fact  upon  our  de- 
partment of  justice,  however,  it  is  to  be  added  that  there 
are  so  many  ways  in  which  actual  infraction  of  the  laws, 
or  at  least  legal  detection,  may  be  avoided  in  wealth,  while 
the  sin  is  the  same  as  in  poverty.  The  impecunious  have 
no  shield.  They  possess  neither  privacy  nor  diplomacy; 
they  can  afford  neither  flight  nor  compromise  nor  influence. 
But  for  the  moral  lesions  of  the  rich  these  several  aids  form 
a  polite  and  effective  veil.  Look  at  the  gambling  and  the 
horse-racing,  for  instance;  at  the  defaulting  and  embez- 


376  THE    COST    OF    COMPETITION 

zling  which  these  milder  indulgences  invite;  at  the  dissipa- 
tion and  the  wanton  luxury  in  high  life  which  sets  the 
example  for  the  lowly  and  leads  them  to  covet  and  to 
secure  by  criminality  what  their  betters  secure  by  mere 
sin!  Look  at  the  "grafters,"  arch-enemies  of  the  re- 
public, identified  always  with  pecuniary  profits  if  not  with 
sheer  opulence !  Look  at  the  aristocratic  prostitutes,  bar- 
tering womanhood  for  rank  and  title  and  motherhood 
for  self-comfort,  more  insidious  yet  in  their  poisoning  of 
the  life-blood  of  the  state!  These  are  worse  criminals 
than  the  toughs  of  the  slums,  for  they  wield  more  influence. 
Yet  they  are  under  no  pressure  of  dire  want.  Rolls  of 
greenbacks  serve  as  visiting-cards  for  them,  and  check- 
books pad  each  drawing-room  and  boudoir  into  a  nirvana 
of  conscience  soothed  with  satins  and  servants.  Under 
a  pressure  of  temptation  and  degenerate  influence  they 
live,  it  is  true;  from  money  too  easily  gotten,  from  no 
habit  formed  of  daily  industry  close  to  the  soil,  cultiva- 
ting content  with  what  it  brings;  more  than  this,  from  a 
false  standard  of  comparative  rather  than  of  absolute 
worth,  set  and  upheld  by  the  entire  nation  as  the  backbone 
of  its  economic  organization.  But  no  such  excuse  have 
they  for  their  sin  as  the  submerged  tenth  possesses  for  its 
crime. 

But  to  return  to  those  ethically  cultured  classes  of  the 
economically  oppressed  which  earn  the  starvation-wage 
in  the  service  of  religion,  education,  art,  medicine  and  the 
divers  methods  of  life-salvage.  If  any  distinct  classes  in 
our  social  structure  might  be  picked  out  as  the  happy  ones, 
these  are  they.  They  stand  in  continuous  refutation  of 
the  doctrine  that  happiness  depends  upon  a  surfeit  of 
worldly  goods.  But  theirs  is  the  happiness  of  altruism,  of 
philosophic  disregard  of  material  environment,  not  that 
of  full  and  natural  life  to  the  utmost. 


THE    COST    TO    THE    LOSERS  377 

In  the  first  place,  the  bulk  of  the  classes  just  cited  be- 
long to  the  level  of  skilled  labor  (Fig.  11)  ;  the  bulk  of 
those  of  shop  and  mill  do  not.  The  education  of  skilled 
labor  stands  as  a  lever  by  which  it  is  elevated  economi- 
cally, but  the  fulcrum  rests  upon  unskilled  labor,  which 
is  correspondingly  depressed.  For  there  is  nothing^  about 
any  sort  of  technical  skill  which  serves  it  as  a  defense 
against  vertical  competition.  Education  directed  com- 
petitively is  all-powerful;  but  education  directed  produc- 
tively influences  not  one  whit  (except  indirectly  and  after 
a  lapse  of  time  longer  than  individual  life,  through  the 
evolution  of  institutions)  the  portion  of  production 
allotted  to  the  producers.  It  affects  only  the  relative  frac- 
tion of  that  portion  allotted  to  skilled  and  unskilled  labor 
respectively.  If  every  individual  producer  were  imagi- 
nably educated  to  the  same  efl'iciency  as  is  the  physician  or 
the  engineer,  and  if  the  same  freedom  of  play  were  open 
to  economic  competition  as  now,  the  portion  of  production 
allotted  to  the  entire  producing  class  would  be  no  more, 
very  probably  it  would  be  less,  than  it  Is  now.  Its  distri- 
bution among  individuals  only  would  be  more  even. 
Science  and  skill  and  art  would  get  less,  and  as  much  less, 
as  what  Is  now  unskilled  labor  would  get  more. 

It  would  be  quite  a  secondary  result  of  such  an  imag- 
inable change  that  the  field  of  free  competition  would  soon 
be  markedly  restricted  compared  to  what  it  Is  now,  with 
corresponding  good  results  from  that.  But  the  fact  to  be 
emphasized  Is  that  not  until  the  greater  Intelligence  and 
sensibility  and  power  of  the  educated  producer  leads  him 
to  take  steps  to  reduce  the  extent  of  competition,  either 
( I )  by  refusing  as  a  unit-class  to  accept  the  prevailing 
wage,  which  is  the  method  of  trades-unionism  and  the 
strike,  or  (2)  by  legislative  substitution  of  cooperation 
for  competition,  which  is  the  method  of  socialism,  will  his 


378  THE    COST    OF    COMPETITION 

economic  position  be  bettered.  His  increased  efficiency  in 
production  will  avail  him  nothing  except  an  increased 
share  taken  from  the  pockets  of  his  fellows,  so  long  as 
he  refuses  to  modify  his  institutional  environment.  He 
must  enter,  as  a  unit,  into  the  same  sort  of  a  revolt 
against  the  public  sanction  of  profit-seeking  as  a  national 
institution  as  the  lawyers,  physicians  and  university-pro- 
fessors of  Russia  are  at  this  moment  effecting  against 
the  pecuniary  corruption  of  their  conservative  bureau- 
cracy. 

Thus  it  is  that  the  skilled  producers  are  comfortable 
and  happy,  in  the  majority  of  cases,  whereas  the  unskilled 
are  the  opposite.  They  have  adopted  abnegation  and 
asceticism  as  their  faith.  Their  progress  of  life  is  by 
abandonment.  They  inherit,  or  learn  unconsciously  with 
their  work,  the  high  ideal  of  work  done  for  the  work's 
sake.  What  worldly  goods  come  their  way  they  may 
spend  upon  plush  furniture  and  graphophones,  or  upon 
madonnas  and  symphony-tickets  (top-gallery)  ;  but  ten 
hours  of  faithful  effort  per  day  they  spend  in  the  worship 
of  good  handicraft:  and  that  is  better  devotion  than  true 
art  receives  in  many  a  wealthy  family.  They  do  not  sell 
their  souls  for  messes  of  pottage.  Between  the  Sister  of 
Charity,  the  Bohemian  artist  and  the  captain  of  a  life- 
saving  crew  there  is  great  difference  In  superficial  appear- 
ance. Their  standards  of  life  may  be  very  differently 
regarded  by  different  readers.  But  In  the  cultivation  of 
skill  and  sympathy  by  the  Sister,  of  skill  and  Insight  by 
the  painter  and  of  skill  and  courage  by  the  surfman  there 
is  so  much  in  common,  compared  to  him  who  measures 
his  progress  In  life  by  the  cultivation  of  a  bank-account, 
that  the  differences  sink  into  Insignificance. 

Yet  It  is  not  true  that  the  skilled  or  altruistic  wage- 
earners  are  all  happy.     Abnegation  and  high  ideal  may 


THE    COST   TO   THE    LOSERS  379 

purify  their  own  souls  above  worldly  desire,  but  it  renders 
them  only  the  more  sensitive  to  the  suffering  and  the 
degradation  about  them:  the  suffering  caused  by  degrada- 
tion among  the  worthy  poor,  the  unconscious  degrada- 
tion in  the  vulgarity  of  the  rich.  Not  even  in  the  highest 
altruism  of  religious  faith  may  one  escape  the  stings  of 
that  horrid  artifice  called  barter.  The  thinking  and  pray- 
ing artist  may  forgive  the  commercial  hand  which  robs 
him;  but  even  in  his  noblest  moments  comes  the  bitter- 
ness of  the  cup  of  Gethsemane :  to  think  that  the  race 
of  man,  which  might  be  so  strong  and  good  and  fair 
to  look  upon,  should  become  so  small  and  cruel  as  to 
waste  its  time  in  the  juggling  of  prices  for  personal 
profit. 

But  very  few  attain  to  such  a  height.  Not  a  few  fail 
to  keep  even  that  competence  of  daily  income  which  alone 
can  feed  it.  The  wage-earner  of  the  family  dies,  or  suf- 
fers long  disease,  or  grows  old.  The  mother  breaks  down. 
The  children  seem  to  run  to  daughters,  and  to  unselfish, 
intellectual,  unmarriageable  ones  at  that.  The  studio  or 
laboratory  is  replaced  by  a  boarding-house.  The  old 
ladies'  homes  claim  what  is  left,  after  that  gives  out. 
There  is  no  continuity  to  the  class.  The  income  allotted 
to  it  by  the  economic  powers  Is  not  even  a  starvation-wage. 
If  it  were  not  for  constant  recruit  from  ranks  below,  of 
young  men  with  less  cultivation  but  with  greater  vigor, 
driven  upwards  from  the  soil,  by  the  force  of  natural 
growth,  from  families  where  the  children  outnumber 
the  books  and  pictures,  the  class  would  soon  become 
extinct. 

Not  all  the  endowed  scholarships  and  Carnegie  libraries 
In  the  universe  can  reverse,  or  even  annul,  the  activity  of 
this  great  fact.  They  are  returning  to  the  impoverished 
soil  but  a  minute  fraction  of  what  is  being  steadily  drained 


38o  THE    COST    OF    COMPETITION 

from  it  and  dissipated  by  barter.  Not  all  the  fervent 
preachings  of  a  patriotic  and  paternal  president,  calling 
ever  for  more  children,  to  stop  up  the  leak,  can  reverse 
this  law  of  gravitation,  can  stanch  this  oozing  away  into 
commercialism  or  chaos  of  the  select  of  the  republic. 
Nature  here  Is  kinder  than  man.  She  consistently  refuses 
to  bring  into  existence  what  man  insistently  refuses  to 
feed. 


IV 

THE  COST  TO  THE  WINNERS 

"  For  what  shall  it  profit  a  man  if  he  shall   gain  the  whole  world  and 
shall  lose  his  own  soul  ?  " 

— Mark,  8:  36. 

"  For  I  say,  this  is  death  and  the  sole  death,  when  a  man's  loss  comes  to 
him  from  his   gain." 

— Broiuning, 

IN  the  great  competitive  struggle  of  the  present  gen- 
eration, what  do  the  winners  win  and  what  do  they 
lose? 
By  the  word  winners,  in  this  connection,  is  meant  the 
winners  in  competitive  effort.  It  does  not  necessarily  refer 
to  all  those  who  have  won  wealth,  for  many  professional 
men  win  wealth;  yet  the  professional  occupations,  with 
the  exception  of  the  civil  law,  are  purely  non-combative, 
or  productive,  in  their  nature.  It  does  not  necessarily 
mean  those  who  have  won  leisure,  for  many  men  who  have 
won  enormous  competitive  power  have  almost  no  leisure; 
they  are  as  much  overdriven  by  their  efforts  at  maintain- 
ing their  much-assailed  position  as  is  the  drudge  or  the 
harassed  pirate.  It  refers,  first,  to  those  who,  as  indi- 
viduals, strive  in  a  purely  competitive  way;  secondly,  to 
those  who,  as  a  class,  have  thereby  attained  to  power;  and, 
thirdly,  to  those  who,  as  heads  of  families,  represent  the 
leisure-class,  though  they  may  know  little  leisure  them- 
selves. It  includes  the  ennuied,  blase  society-swell,  as  well 
as  the  hurried,  worried  business-man.  It  covers  the  over- 
fatigued  hostess  of  a  brilliant  social  circle,  as  well  as  the 

381 


382  THE   COST   OF   COMPETITION 

self-comforting  recluse.  It  means  the  over-schooled  chil- 
dren of  the  merely  well-to-do,  with  their  lessons  in  music, 
drawing,  foreign  language,  dancing  and  gymnasium,  on 
top  of  the  regular  day  and  Sunday  schools,  as  well  as 
the  over-tutored,  under-disciplined  children  of  the  very 
wealthy.  It  includes  all  those  who,  by  devoting  them- 
selves to  vertical  competitive  effort,  have  kept  themselves 
out  of  the  productive  layer  of  society,  as  well  as  those 
who,  by  horizontal  competitive  effort  of  a  winning  sort, 
have  succeeded  in  amassing  wealth. 

To  any  such  class  as  this  the  cost  of  competition  comes 
home  in  the  guise  of  physical  privation  only  in  sporadic 
individual  cases.  Of  the  barterers,  even  those  who  win 
the  starvation-wage  of  their  class  are  comfortably  housed, 
fed  and  educated.  Even  the  widows  and  orphans  are 
usually  so ;  a  sufficient  inheritance  of  vested  interests  keeps 
the  wolf  from  the  door. 

But  to  each  one  of  them  comes  steadily  home,  and  ulti- 
mately strikes  to  the  quick,  the  ethical  cost  of  competition. 
Life  cannot  be  carried  on  for  the  sake  of  profit-seeking 
and  the  profit-seeker,  as  a  class,  not  lose  continuously  there- 
by. The  barterer  may  be  as  philanthropic,  as  charitable,  as 
scrupulous  in  his  religious  observances,  as  conscientious 
In  all  his  relations  with  men,  as  may  be;  yet  in  his  week- 
day collections  of  rent,  dividends  and  profit,  with  all  which 
that  implies,  he  loses  inevitably  his  chance  for  the  highest 
ethical  development.  If,  on  the  other  hand,  he  is  as  mean 
as  these  avocations  tempt  him  to  be,  he  is  an  ogre.  His 
striving  for  concrete,  perceptible  morality  is  denied  ethical 
satisfaction  as  persistently  and  ruthlessly  as  the  striving 
of  the  laborer  is  denied  economic  satisfaction.  If  his 
innate  generosity  and  morality  be  sufliciently  insistent  to 
coerce  him,  he  abandons  his  competitive  for  a  productive 
existence,   for  conscience's  sake,  as  do  the  few  business- 


THE    COST    TO    THE    WINNERS  3«3 

men  who  turn  true  statesmen  or  artists;  but  with  it  he 
abandons  economic  power.  He  not  only  departs  from 
our  argument,  by  ceasing  to  be  one  of  the  "  winning  " 
class,  but  he  leaves  to  less  scrupulous  hands  the  field  and 
the  power  which  he  himself  might  have  wielded  with 
moderation. 

In  order  to  have  maintained  that  power  he  must  buy 
in  the  cheapest  market  and  sell  in  the  dearest.  There's 
the  rub.  He  personally  may  refuse  to  oppress  labor,  to 
bulldoze  the  needy  seller,  to  take  advantage  of  the  be- 
wildered buyer.  His  choice  of  the  cheapest  article  of  raw 
material  which  is  offered  sets  free  in  others  all  the  deviltry 
of  competition  in  profit-seeking.  How  may  he  ensure 
that  the  one  who  sells  to  him  at  the  lowest  price  has  not 
attained  his  figure  by  oppression  of  labor,  by  taking 
advantage  of  others'  bankruptcy,  by  employing  child-labor 
and  by  all  the  rest  of  the  string  of  cruelties  which  men 
are  hired  to  undertake  by  the  pecuniary  profit  artificially 
attached  thereto  by  the  competitive  system?  ^ 

If  he  should  feel  the  truth  of  all  that,  how  may  he 
avoid  it?  Buying  at  more  than  the  lowest  market-price 
avails  nothing.     That  simply  places  a   further  premium 

1  Mrs.  Florence  Kelley,  Secretary  of  the  Consumers'  League,  who  is  con- 
stantly in  contact  with  the  factory-life  employed  in  the  manufacture  of 
women's  underclothing,  involving  much  female  and  child  labor,  testifies 
that  the  great  majority  of  proprietors  or  managers  are  too  humane  to 
maintain  toward  their  employees  the  attitude  which  competition  forces  upon 
them.  But  they  can  and  will  hire  less  scrupulous  foremen  and  forewomen, 
who  tyrannize  the  workers  unmercifully, — to  the  inexplicable  quieting  of 
the  managerial  conscience.  Mrs.  Van  Vorst,  in  her  book,  "  The  Woman 
who  Toils,"  gives  a  graphic  picture  of  her  experience  in  a  Chicago  fac- 
tory, owned  and  managed  by  a  most  benignant  gentleman,  who  operated 
it  upon  this  plan,  with  the  result  that  life  therein  was  literally  unendurable 
to  many  of  the  girls.  When  they  left  its  doors  no  one  saw  them  more,  nor 
cared.  The  responsibility  was  over  and  the  conscience  clear.  Can  it  be  true 
that  the  Recording  Angel  is  writing  against  his  name  no  account  of  what 
those  girls  walked  out  into  when  they  "  threw  up  "  his  intolerable  "  job  "  ? 


384  THE    COST    OF    COMPETITION 

upon  deception.  He  cannot  ensure  that  the  seller  at  the 
higher  price  has  incurred  his  figure  by  generosity  to  labor, 
or  by  similar  altruism  in  other  directions. 

Once  set  free  the  doctrine  that  prices  are  rightfully 
variable  at  will,  that  he  who  can  influence  them  may  do  so 
and  may  put  the  difference  into  his  pocket,  and  the  full 
harm  is  done.  Comparative  individual  morality  has  then 
ceased  to  be  a  factor  in  the  residt.  It  is  a  factor  only  in 
determining  who  stays  in  the  race  and  who  drops  out. 
It  does  not  by  one  atom  alter  the  evil  nature  of  the  effort 
nor  the  empty  character  of  the  prize.  Each  man  is 
tempted  to  do  his  worst.  If  he  resists  the  temptation  he 
loses  his  economic  influence.  He  is  forced  to  step  aside 
and  let  the  mad  world  surge  by  in  its  race  for  wealth.  If 
he  yield,  he  has  set  going  forces  which  will  ramify  end- 
lessly and  permeate  the  entire  complexity  of  social  struc- 
ture, converted  as  they  go  into  resultants  and  reactions  of 
a  sort  potent  for  evil  to  an  extent  never  dreamed  of  nor 
desired  by  their  real  originator. 

For  instance,  this  barterer  may  wish  to  give  his  family 
an  European  trip,  or  his  son  another  year  at  college. 
Most  laudable !  So  he  goes  on  'Change  and  bears  a  few 
industrials,  or  takes  a  flyer  on  a  margin;  or  he  makes  extra 
effort  and  corrals  a  competitive  concern  which  has  long 
stood  In  his  way;  or  he  effects  a  pool  of  interests  become 
too  combative  for  mutual  profit.  He  makes  his  "  pile," 
legally  and  honestly.  He  spends  it  honestly.  He  sees 
nothing  further.  But  a  thousand  miles  away  a  widow's 
securities  turn  worthless  on  her  hands;  five  rival  manufac- 
turers forego  the  family's  long-talked-of  European  trip, 
or  remove  their  sons  from  college  to  office;  a  shop  shuts 
down  and  sets  a  thousand  hands  adrift  in  winter;  a  million 
defenseless  housewives  find  the  price  of  some  daily  neces- 
sary of  existence  increased.      Most  damnable,  all  of  it! 


THE    COST    TO    THE    WINNERS  385 

But  it  is  utterly  useless  to  condemn  the  individual  doer 
of  these  deeds.  We  may,  if  we  wish  to  be  so  foolish, 
waste  time  in  condemning  the  trusts  or  the  trades-unions, 
the  capitalist  or  the  laborer.  Not  all  of  their  acts  are 
easily  defensible.  But  what  we  may  not  forget,  under 
penalty  of  treason,  is  that  they  are  all,  like  the  honest 
barterer  just  adduced  in  illustration,  doing  only  what  we 
are  doing, — except  that  their  opportunities  and  temptations 
are  on  a  larger  scale  than  ours.  In  general,  they  and  we 
are  doing  what  the  law  permits  and  what  neither  the 
pulpit  nor  the  press  forbids,  or  even  discourages;  what 
they  both  sanction,  in  fact,  and  urge  upon  the  youth  of 
the  country  as  its  properly  highest  aim,  viz. :  To  succeed 
in  business. 

To  succeed  in  business  is  to  make  all  you  can  out  of 
your  neighbor.  "  What  the  traffic  will  bear  "  is  the  only 
limiting  rule  as  to  high  prices  in  the  commercial  world. 
There  is  none  other  voiced  by  either  church  or  state, — 
though  the  true  faith  speaks  up  about  it  in  no  uncertain 
tone.  But  then,  that  is  religion,  and  it  and  business  have 
never  been  known  to  mix  well.  The  law  mumbles  some- 
thing about  "six  per  cent.";  about  as  effectively  as  might 
be  expected  from  an  institution  which  has  abandoned  all 
pretense  to  foundation  upon  moral  principle  and  has 
planted  its  banner  upon  precedent  and  a  percentage.  Let 
one  only  be  so  skillful  as  to  cause  his  twelve  per  cent., 
or  his  thirty  per  cent.,  to  look  merely  like  five,  upon 
most  superficial  inspection,  and  he  receives  the  plaudits 
of  the  teachers,  the  primates,  the  bench  and  the  well- 
to-do. 

"  The  court  awards  it  and  the  law  allows  it."  Only 
the  dim  multitudes  grow  a  little  more  restive,  murmur 
confusedly,  and  feel  about  their  countable  ribs;  knowing 
not  how  the  pound  of  flesh  has  left  them,  but  only  that  it 


386  THE    COST    OF    COMPETITION 

is  gone.     Also,  that  more  than  one  drop  of  life-blood  has 
gone  with  it. 

But  the  shameful  part  of  it  all  is  that,  in  spite  of  this 
wide  belief  in  the  virtue  of  commercial  competI);ion,  each 
actor  in  competitive  effort  is  conscious,  cannot  help  being 
conscious,  to  some  quite  appreciable  degree,  of  what  he  is 
doing.  He  knows  that  his  effort  is  to  get  command  of 
the  largest  market  at  the  highest  price  compatible  there- 
with, and  that  any  increment  in  either  comes  from  his 
neighbor's  pocket  and  is  to  the  latter  a  loss.  He  knows 
that  this  Is  the  antithesis  of  unselfishness,  of  Christianity. 
He  either  feels  the  sinking  of  his  self-respect  as  he  does  It 
or  else  he  has  grown  callous.  He  retreats,  very  natu- 
rally, behind  the  defense  that  failure  of  selfish  effort  would 
only  reverse  the  situation,  not  remedy  it;  that  then  the 
other  man  would  just  as  gleefully  and  just  as  wickedly 
pocket  the  defendant's  loss. 

The  defense  stands  good  as  an  indictment  of  the  insti- 
tution of  barter,  but  not  as  freeing  the  barterer  from 
blame.  He  has  heard,  perhaps  the  day  before,  the  ser- 
mons of  Him  who  taught  the  return  of  good  for  evil,  who 
taught  a  better  rule  than  the  golden  one:  Do  to  your 
neighbor  better  than  you  would  be  done  by.  It  is  not 
sufficient  to  sing  aniens  to  these  doctrines  on  Sunday  and 
to  subscribe  to  the  Charity  Ball  on  Monday.  All  through 
the  week  let  him  remember  his  Sunday's  attitude,  which 
he  felt  to  be  so  elevating  and  proper.  In  his  daily  trans- 
actions with  all  men.  He  will,  of  course,  find  it  impossi- 
ble of  Incorporation  Into  his  business  acts.  But  it  will 
come  well  home  to  him.  If  he  but  try  it  conscientiously, 
that  it  is  impossible,  that  profit-seeking  variation  of  prices 
and  the  practice  of  Christianity  are  hopelessly  incompati- 
ble.    If  he  makes  but  the  slightest  pretense  to  consistency 


THE    COST   TO   THE   WINNERS  387 

he  will  see  plainly  the  alternative  before  him:  To  retire 
from  competitive  business  or  to  retire  from  avowed 
Christianity. 

But  if  the  weak  flesh  fails  of  that  altruistic  attainment 
it  can  at  least  rise  to  a  denouncement  of  the  situation  which 
tempts  it.  The  situation  is  absolutely  a  human  and  an 
artificial  one,  Man  has  made  it.  He  can  break  it.  He 
has  not  made  it  consciously;  he  has  Inherited  it  from  the 
more  brutal  past,  as  he  did  slav^ery.  But  it  is  none  the 
less  than  slavery  an  artificial  institution,  to  be  absolutely 
and  permanently  abolished  just  so  soon  as  enough  good 
men  and  true  say,  each  to  himself  and  to  his  neighbor: 
It  shall  be  done  I 

Upon  every  one  who  barters,  whether  for  a  railroad,  a 
day's  work  or  a  yard  of  muslin,  hangs  heavily  this  Indict- 
ment of  guilty  responsibility  for  the  entire  "  social  ques- 
tion." It  is  not  the  Vanderbilts  nor  the  Rockefellers 
who  alone  are  oppressing  the  poor;  for  If  they  ceased  all 
economic  activity  others  would  take  their  places.  It  Is 
each  individual  citizen,  carrying  on  his  dally  portion  of 
bargaining,  buying  his  shoes  and  hatpins,  selling  his 
particular  wares,  hiring  his  factory  or  domestic  help, — 
hoping  ever  to  make  his  efforts  more  successful,  more 
powerful,  more  profitable;  opposing  ever  the  efforts  of 
the  open-minded  for  the  cessation  of  all  barter, — these 
are  the  ones  who,  conscience-stricken,  must  lie  awake  at 
night  to  hear  the  wails  of  the  needy  and  the  broken- 
hearted, the  curses  of  the  vengeful  and  the  desperate 
throughout  the  land. 

All  this  aside,  however,  does  competition  pay,  without 
regard  to  conscience,  even  when  one  wins?  Does  it  bring 
peace  of  mind,  or  health,  or  leisure,  or  Insurance  against 
any  of  the  physical  or  mental  Ills  of  life?     Does  It  create 


388  THE    COST    OF    COMPETITION 

a  community-environment,  visible  or  invisible,  of  the  sort 
ideal  in  modern  civilization,  a  thing  of  peace,  beauty  and 
harmony  ? 

The  business-man  is  always  worried.  He  is  always 
overworked.  His  family  scarcely  knows  him.  He  lacks 
leisure  and  the  aesthetic  appreciation  which  goes  with  it 
almost  as  thoroughly  as  does  the  laborer.  One  of  the 
editors  of  one  of  our  best  monthlies  once  remarked: 
"  I  never  knew  a  man  truly  lovable,  to  the  core,  but  that 
he  was  a  man  of  leisure."  ^  The  business-man's  leisure 
never  comes,  except  with  competence  and  retirement.  To 
many  men  these  never  come.  When  they  do  they  find 
him  broken  in  health,  chained  to  commercialism  of 
thought  and  taste  and  lost  forever  to  true  amusement. 

A  young  man,  a  stranger  to  New  York  and  what  it 
stands  for,  was  once  taken  to  view  the  yachts  laid  up  in 
winter-quarters  in  South  Brooklyn.  There  were  arrayed 
not  only  the  white-winged  craft  of  moderate  size,  costly 
means  to  a  day's  racing  or  a  week  of  cruising,  but  dock 
after  dock  filled  with  great  steam-yachts,  veritable  baby- 
liners,  many  of  them  fit  for  the  Australian  passage  and 
all  of  them  palaces  within.  The  figures  of  first  and  cur- 
rent cost  were  astounding.  "  Where,"  he  asked,  "  can 
enter  the  return  commensurate  with  such  outlay?" 
"  The  men  who  own  these  boats,"  came  the  reply,  in  a 
tone  of  derision  at  his  greenness,  "  have  bought  every 
pleasure  purchasable  here  below.  Even  so,  they  cannot 
spend  their  incomes.  They  are  most  of  them  dyspeptic. 
Many  of  them  are  ovcrworried.  All  of  them  are  bored. 
If  they  can  keep  a  steam-yacht  in  commission  at  a  cost 

2  "  Half  the  charm  of  people  is  lost  under  the  pressure  of  work  and  the 
irritation  of  haste.  We  rarely  know  our  best  friends  on  their  best  side; 
our  vision  of  their  noblest  selves  is  constantly  obscured  by  the  mists  of 
preoccupation   and   weariness." — Hamilton    JV.  Mabic. 


THE    COST   TO   THE    WINNERS  389 

of  a  hundred  thousand  a  year  and  get  out  of  It  a  single 
half-day  of  real  enjoyment,  the  investment  is  a  profitable 
one — to  them." 

The  answer  sank  deep.  If  this  be  success,  the  lauded 
goal  toward  which  our  young  men  are  urged  and  for 
which  they  are  trained,  where  is  the  intelligence  of  our 
vaunted  civilization?  If  this  be  legal,  where  one  man 
may  spend  for  a  day's  pleasure,  often  for  mere  vulgar 
display,  still  more  often  in  dissipation  or  in  empty  politi- 
cal ambition  for  public  office  which  is  criminally  unpa- 
triotic, a  sum  w^hich  means  life  or  death  to  hundreds  or 
healthful  pleasure  to  tens  of  thousands, — if  this  be  legal, 
where  is  the  boasted  justice  of  our  free  country? 

That  incident  occurred  nearly  two  decades  ago.  The 
answer  which  time  has  brought  to  the  inquirer  is  more 
cruel,  more  absurd,  more  stupid  in  its  cruelty,  than  could 
have  been  compassed  by  his  youthful  imagination.  Not 
only  is  any  man  who  attains  the  commercial  power  legally 
free  to  tax,  in  the  form  of  profit,  interest,  rent,  dividends 
or  the  "  cost  of  doing  business,"  millions  of  his  fellow- 
citizens,  until  the  plethora  of  his  accumulations  stifles 
him,  but  he  is  permitted  to  collect  that  tax  by  means  of  a 
free  fight  over  the  spoils  which  wastes  and  loses  two  dol- 
lars for  every  one  which  he  succeeds  in  clutching.  For 
clumsy  inefficiency,  as  well  as  for  cruelty,  slavery  is  not 
to  be  compared  with  the  competitive  method  of  the  dis- 
tribution of  wealth ;  for  slavery  affected,  directly,  only 
an  inferior  race  of  men,  while  barter  oppresses  the  best 
in  the  land;  slavery  conserved,  with  profit,  those  whom  it 
oppressed,  as  railroad-contractors  do  their  horses,  while 
barter  irresponsibly  murders  those  whom  it  has  robbed. 

But  these  considerations  do  not  bear  so  directly  upon 
the  ethical  side  of  life  as  does  the  impalpable,  but  not 
the  less  coercive,  fact  that  every  man  is  placed  in  relation 


390  THE    COST    OF    COMPETITION 

to  his  neighbor  upon  a  comparative  basis.  His  income, 
or  his  bare  opportunity  to  strive  for  one,  depends  not 
upon  his  absolute,  but  upon  his  comparative,  productive 
ability.  A  given  person  may  possess  parts,  inherited  or 
acquired,  which  fifty  years  ago  would  have  placed  him  in 
impregnable  superiority.  To-day,  because  of  tremendous 
improvements  in  productive  methods  and  machines,  those 
same  parts  will  produce  five  or  ten  times  as  much  wealth 
as  they  would  have  then.  Yet  their  possessor  now 
receives  the  starvation-wage,  or  perhaps  no  employment 
at  all.  He  has  become  the  unknown  employee  of  some 
"  trust."  Fifty  years  from  now  he,  or  his  grandchild, 
having  the  same  parts,  may  actually  produce  ten  times 
as  much  as  now;  yet,  if  competition  has  increased  like- 
wise, they  will  be  poorer  then  than  now.  Ecce  progress 
and  poverty ! 

This  happens  solely  because  his  income  amounts  to  the 
margin  of  comparative  superiority  over  his  fellows.  The 
worth  of  his  absolute  productivity  is  lost  sight  of.  He 
is  like  a  horse  capable  of  usefully  traversing  a  mile  with 
the  useful  celerity  of  two  minutes  and  twenty  seconds;  if 
he  be  placed  in  comparison  with  race-track  neighbors  capa- 
ble of  trotting  but  a  few  seconds  faster  he  becomes 
almost  worthless.  We  employ  our  great  army  of  indus- 
trial servants  upon  the  national  principle  of  dealing  in 
margins,  instead  of  buying  outright. 

On  the  race-track  or  in  the  broker's  ofl^ce,  where  sport 
is  the  object  of  all  effort,  this  may  be  right  enough.  But 
for  the  nation  to  deliberately  base  its  entire  industrial 
structure  upon,  and  to  make  the  question  of  life  and  death 
for  many  of  its  citizens  depend  upon,  such  a  purely  gam- 
bling principle  is  hardly  in  convention  with  our  other 
standards  of  public  morality. 

The  application  tests  the  moral.     Since  the  attitude  of 


THE    COST   TO   THE   WINNERS  391 

each  toward  all  the  others  is  condemned  to  be  that  of 
odious  comparison  in  all  matters  industrial  and  commer- 
cial, it  inevitably  becomes  so  in  all  private  life.  With  the 
winners  and  their  families  the  perception  of  absolute 
beauty  is  almost  impossible;  its  proper  appreciation  is  out 
of  the  question.  Everything  is  comparative.  Realities 
are  lost  sight  of.  Private  possessions  and  social  func- 
tions, the  material  environment  of  home  and  childhood 
and  the  immaterial  attainments  of  education  and  culture, 
the  fruits  of  creative  art  and  the  exhortations  of  the 
morally  inspired,  are  all  viewed  alike  as  worthy  or  un- 
worthy, as  offering  the  consolation  and  inspiration  of 
beauty  or  the  annoyance  of  a  thing  ugly  and  hateful, 
solely  according  to  whether  they  be  more  or  less  than 
that  of  a  neighbor  or  of  some  other  class.  The  philo- 
sophical truth  that  all  things  are  beautiful  and  that  ugli- 
ness does  not  exist  falls  surely  into  stony  soil  in  the  ears 
of  the  present  generation.  In  the  midst  of  luxury  which 
might  otherwise  be  beauty  and  comfort  also,  there  is  no 
wholesome  content.  In  each  one's  mind  the  question  is 
not:  "Am  I  well  off?"  but,  "Am  I  better  off  than  he, 
or  she?  "  The  right  and  proper  discontent  of  man  with 
his  attainments  coupled  with  the  divine  peace  of  content 
with  his  possessions  has  given  way  to  the  sordid  com- 
bination, in  the  self-made  man,  of  complete  satisfaction 
with  himself  and  complete  dissatisfaction  with  his  pos- 
sessions. 

In  such  a  field  as  this  the  teachings  of  art,  of  religion 
and  of  daily  life  struggle  for  a  compromise  in  a  field  of 
hopeless  incompatibility.  The  result  is  not  so  good,  even, 
as  an  honest  compromise,  A  dishonorable  duplicity 
takes  its  place.  There  has  grown  up  and  been  accepted  a 
dual  system  of  ethical  standards.  Its  two  opposite  parts 
are:    (i)   those  of  the  shop  and  office,  and  (2)   those  of 


392  THE    COST    OF    COMPETITION 

outside  life.  In  the  former  the  association  of  man  and 
man  is  that  of  machine  to  machine,  grouped  together 
solely  for  convenience  and  efficiency  in  production.  Good- 
ness consists  of  success  in  those  directions;  failure  in  the 
same  is  blameworthy;  all  else  is  negligible.  Those  ameni- 
ties and  courtesies  which,  in  the  long  run,  are  seen  to 
lubricate  transactions  are  admitted;  all  others  are  barred 
out.  The  one  unpardonable  sin  is  to  fail  to  be  produc- 
tive, at  least  in.  the  barterer's  sense  of  the  word. 

So  universally  is  it  taken  for  granted  that  these  stand- 
ards are  true  and  right,  so  steeped  in  and  blinded  by  the 
revered  traditions  of  "  business  "  is  the  average  person, 
that  it  is  actually  necessary  to  call  attention  to  the  com- 
plete reversal  of  these  standards  in  every  other  walk  of 
life,  in  all  the  other  activities  of  these  same  average 
people. 

It  can  scarcely  be  forgotten  that  in  the  family-home 
productivity  is  no  criterion  of  w^orth,  no  gauge  of  the 
portion  of  available  love  and  care  and  luxury  to  be 
allotted  to  each.  It  is  usually  the  most  useless:  the  babes, 
the  aged  and  the  invalids,  who  get  the  best.  To  the  pro- 
ductive ones,  the  healthy  adults,  their  very  ability  to  pro- 
duce is  unconsciously  accepted  as  being  itself  their  chief 
reward  in  life.  They  can  be  up  and  doing;  therefore  they 
need  no  other  consolation  or  enjoyment.  Yet  in  the 
family  we  have  the  oldest,  the  most  stable  and  the  most 
perfect  example  of  that  community  of  interests,  and  of 
cooperative  specialization  of  industry  for  the  protection 
of  the  race  against  want,  the  evolution  of  which  is  now 
taking  place  before  our  eyes  and  in  our  hands  in  the 
growth  of  the  organic  state. 

It  is  less  familiarly  obvious  how  universally  these  same 
standards  are  applied  to  all  public  activities  not  tainted 
by  association  with  profit-seeking.     Let  an  inhabitant  of 


THE    COST   TO    THE   WINNERS  393 

another  planet  arrive  and  inquire  of  us  whether  we  be 
civilized:  what  would  be  the  reply?  We  should  point 
with  pride  to  the  hospitals,  the  lunatic  and  orphan 
asylums,  the  homes  for  the  aged  and  infirm,  the  public 
schools  and  the  reformatory  prisons.  We  should  explain, 
most  gratifyingly,  that  the  community  as  a  whole  recog- 
nized to  the  full  the  truth  of  the  fact  that  a  chain  is  no 
stronger  than  its  weakest  link,  that  a  community  can 
never  far  surpass  in  development  Its  weakest  class,  that 
any  small  disregard  of  human  life,  liberty  and  happiness 
Is  publicly  demoralizing;  in  short,  that  life  Is  sacred.  We 
should  show  how  consistently  and  systematically,  at  what 
pains  of  scientific  and  costly  effort,  every  scrap  of  maimed 
humanity  Is  cherished  and  protected;  how  no  case  enter- 
ing the  hospital  Is  so  desperately  hopeless  as  to  stay  the 
surgeon's  best  effort;  how  no  poor  wretch  may  be  so 
hopelessly  insane  or  so  ruthlessly  criminal  (except  In  one 
single  line)  that  he  should  not  be  fed  and  housed  to  the 
end  of  his  unnatural  days;  how  the  law  and  the  public 
officers  protect  alike  the  babe  unborn  and  the  senile  idiot. 
We  should  show  in  all  this  how  consistently  the  con- 
nection between  productivity  and  protection  is  not  only 
neglected,  but  Is  reversed;  how  the  least  productive 
members  of  the  body  politic  receive  the  most  systematic 
care.  We  should  reveal  how  thoroughly  the  fact  is 
grasped  that  any  departure  from  this  standard,  any  dis- 
carding of  life  as  comparatively  worthless,  any  prostitu- 
tion of  life  to  a  valuation  of  it  in  terms  of  anything  more 
material,  were  a  double  loss:  of  it  and  of  our  best  selves 
too.  If  the  Spartan  murder  of  unpromising  children,  or 
of  the  hopelessly  mad,  were  proposed,  we  should  not 
only  shudder  our  refusal  in  horror;  we  should  fearfully 
falter  that  we  did  not  dare.  We  should  realize  that  it 
would  not  pay,  in  the  long  run;  that  the  reduction  of  life- 


394  THE    COST    OF    COMPETITION 

valuation  to  terms  of  mere  present  productivity  inevi- 
tably loses  to  the  community  its  greatest  potentiality  for 
future  productivity:  solidarity. 

Yet  in  the  shop  and  office  these  altruistic  standards 
are  utterly  neglected,  with  neither  disgust  nor  fear.  So 
soon  as  a  member  of  the  little  community  becomes  non- 
productive,— or  rather  unprofitable,  productive  to  a 
degree  less  than  a  certain  standard, — he  or  she  is  dis- 
carded. In  enforcing  this  unwritten  law  the  industrial 
authorities,  petty  or  powerful  as  the  case  may  be,  will 
not  recognize  any  wrong  action.  They  say  that  they 
must;  which  is  true,  in  one  sense.  But  they  do  not  need 
to  say  that  it  is  right.  These  men  are  Christian  gentle- 
men. They  support  and  encourage  the  institutions  of 
charitable  civilization.  Why  can  they  not  see  that  it  is 
the  unchristian  ethics  of  their  commercial  actions  which 
alone  creates  the  demand  for  them?  The  head  of  an 
office  will  mechanically  and  unthinkingly  discharge  a 
female  employee,  creating  thereby  a  potentiality  for 
crime,  lunacy  or  suicide,  when  he  would  rebuke  himself 
and  apologize  to  her  for  clumsily  colliding  with  her  on 
the  sidewalk.  The  women  of  his  social  circle  must  not 
receive  at  his  hands  the  slightest  suggestion  of  affront  or 
annoyance;  the  women  of  his  factory  receive  at  his  hands 
an  income  such  that  honor  can  be  maintained  only  at  the 
expense  of  health,  sanity  and  life  itself,  in  the  face  of 
temptations,  due  to  unnaturally  congested  homes,  which 
only  the  minority  can  resist. 

This  dual  and  inconsistent  standard  of  ethics  is  hope- 
lessly demoralizing.  Does  he  say  that  he  cannot  help  it? 
I  say  that  he  is  the  only  one  who  can  help  it.  This  prob- 
lem will  be  solved  by  the  able  business-men  of  the  com- 
munity or  it  will  not  be  solved  at  all.  He  cannot  help  it 
by  arbitrarily  and   individually   raising  wages.     He  can 


THE    COST    TO    THE    WINNERS  395 

aid  it  in  only  one  way,  and  in  that  way  with  absokite  cer- 
tainty of  success:  By  combination  with  his  fellow  bus- 
iness-men ( I )  in  absolute  disregard  both  of  immediate 
private  profit  and  of  partisan  politics,  and  (2)  with  the 
firm  purpose  of  substituting  the  cooperation  of  the  entire 
community  for  the  present  commercial  competition  be- 
tween the  strongest  Individuals.  The  bread  thus  cast 
upon  the  waters  will  not  only  return  to  him  an  hundred- 
fold in  the  shape  of  the  production  and  enjoyment  of 
commodities,  but  in  the  first  free  growth  of  his  class  in 
the  line  of  ethical  development. 

The  details  of  plan  and  policy  for  doing  this  can  safely 
be  left  to  his  judgment.  Neither  the  statesmen  of  the  day 
nor  the  book-writers  and  economists  possess  the  equip- 
ment essential  for  their  proper  direction. 

But  it  is  not  alone  in  the  business-oflfice  that  the  false 
ethics  of  commercial  competition  prevail.  There  is  no 
field  of  higher  effort  ever  touched  by  the  winners  which 
is  not  tainted  with  the  habit  and  its  philosophy.  More 
men  send  their  sons  to  college  because  other  men  send 
theirs  than  because  they  really  believe  in  added  efficiency 
or  happiness  to  be  gained  thereby.  All  colleges  arrange 
their  curriculums  with  a  sharper  eye  to  keeping  up  the 
size  of  student-body  than  to  the  really  best  development 
of  the  young.  In  music  and  in  art  it  is  much  the  same. 
It  is  the  one  who  can  fill  the  auditoriums  who  is  declared 
fit  and  who  Is  accorded  the  means  to  survive,  not  the  one 
who  leads  the  way  toward  the  highest  ideals.  The 
churches  bid  for  patronage  almost  as  do  the  theaters. 
The  yellow  journals  are  doing  nothing  worse.  In  every 
pleasure  or  amenity  of  life  the  man  who  measures  his 
day's  work  as  good  or  bad  according  to  whether  it  be 
greater  or  less  than  his  fellow's,  measures  inevitably  his 


396  THE    COST    OF    COMPETITION 

enjoyment  by  the  same  scale.  His  music,  his  art,  his  club, 
his  church,  his  dinner-table,  his  country-home, — nay,  he 
is  tempted  even  to  include  his  wife  and  family, — are 
all  good  or  bad,  not  according  to  whether  they  embody 
and  reflect  some  modicum  of  that  divine  beauty  which 
lies  in  all  things,  which  is  never  negative  and  which  it  is 
the  sole  joy  of  life  to  perceive;  they  are  good  or  bad 
according  as  they  may  be  larger  or  smaller,  better  or 
worse  (to  his  superficial  standards),  than  others  of  the 
circle  which  his  birth  and  tastes  have  led  him  to  enter, 
or  to  try  to  enter,  and  adopt.  Look  at  your  few  cherished 
friends,  whose  best  side  you  see,  and  you  will  deny  this. 
Look  more  abroad,  in  the  newspaper  reports  of  divorce- 
trials,  forgeries  and  defalcations,  and  you  will  see  that  it 
is  true,  that  the  fruit  follows  the  vine. 

Since,  in  such  social  and  ethical  competition  as  this, 
the  failure  of  the  many  to  equal  the  advanced  position 
attained,  necessarily,  by  only  the  small  minority  is  Inevi- 
table, the  winner  of  the  economic  race  is  prejudged  and 
condemned,  by  his  fundamental  philosophy,  to  failure  of 
satisfaction  In  the  ethical  field  of  effort.  As  surely  as  he 
has  won  above  the  whole  world,  or  even  tried  to  do  so, 
he  has  lost  his  best  soul. 

It  Is  this  compensatory  balance  between  economic  loss 
and  ethical  gain  which  founds  the  two  aristocracies  of 
free  America.  The  aristocracy  of  wealth  has  won 
economically  and  has  lost  ethically.  It  has  hopelessly 
lost  that  proper  perspective,  that  sober  estimation  of  all 
things  and  that  sensibility  to  the  most  delicate,  even  the 
Imperceptible,  which  together  constitute  good  taste.  It 
has  the  superficial  appearance,  the  studied  manner,  of  high 
cultivation.     All  else  Is  denied  it. 

The  intellectual  and  ethical  aristocracy,  on  the  other 


THE    COST    TO    THE    WINNERS  397 

hand,  has  lost  economically,  more  or  less  voluntarily,  in 
that  either  it  will  not  or  it  cannot  enter  the  race  for 
wealth ;  but  it  is  thereby  freed  for  real  ethical  develop- 
ment. It  may  include  the  offspring,  after  sufficient  gene- 
rations, of  the  other  class :  those  who  have  inherited, 
rather  than  acquired,  privilege  and  opportunity  and  who 
have  failed  to  inherit  the  taste  for  profit-seeking.  But 
its  greater  proportion  consists  of  those  who  are  receiving 
the  starvation-wage  for  the  best  productivity  which  the 
twentieth  century  affords.  Theirs  are  the  highest  aims, 
the  noblest  endeavor,  the  finest  taste,  the  genius  for  crea- 
tion. Chained  to  the  tread-mill  of  pot-boiling,  except 
for  the  consolation  of  abstract  or  religious  faith  theirs 
are  the  tortures  of  Tantalus.  On  every  hand  lies  truth, 
beauty,  inspiration,  opportunity,  loud  need:  for  apprecia- 
tion, absorption,  creation,  devotion.  But  theirs  is  neither 
the  time  nor  the  strength  nor  the  means  for  response. 
They  are  fearfully  the  sufferers.  Pain  is  apportioned  to 
refinement  of  sensibility,  not  to  force  of  blow.  But  are 
they  the  greatest  losers?  How  does  the  community  fare, 
compared  with  what  it  might,  for  their  paralysis? 

It  is  what  they  are  and  what  they  have  to  give  which 
the  winners  fail  to  attain.  It  is  these,  the  things  which 
they  can  neither  be  nor  have  nor  understand,  nor  hardly 
see  even,  which  constitute  the  immeasurable  loss  of  the 
winners. 


V 

THE   COST  TO  THE   COMMUNITY 

THE  real  cost  to  a  community  of  any  institution 
which  makes  for  the  degeneration  of  ethical 
standards  lies,  of  course,  in  its  resultant  effect 
upon  each  individual  citizen.  That  the  highest  develop- 
ment of  the  individual  is  the  object  of  all  human  effort  and 
the  proper  test  of  every  human  institution  or  doctrine  is 
agreed  upon  alike  by  the  most  antagonistic  schools  of 
modern  political  doctrine.  From  the  anarchist  at  one  end 
of  the  line,  urging  that  there  be  no  law  but  the  individual 
will,  to  the  socialist  at  the  other,  urging  that  the  natural 
integration  of  individual  wills  shall  be  made  really  superior 
to  any  one  of  them, — through  all  the  intermediate  degrees 
of  political  faith  upheld  by  less  radical  citizens, — the  dif- 
ference is  wholly  one  as  to  ways  and  means  advocated,  not 
as  to  the  object  in  view. 

In  the  preceding  study  of  the  ethics  of  the  individual  as 
influenced  by  the  economic  forces  controlled  by  one  class 
of  citizens,  therefore,  the  ultimate  goal  of  the  present  an- 
alysis might  seem  to  have  been  both  reached  and  covered. 
But  the  transmission  of  the  effects  of  competitive  effort  to 
the  individual  character  is  not  always  so  direct  nor  so 
plainly  visible  as  in  the  cases  cited.  There  the  discussion 
was  confined  to  the  reactive  effect  of  competitive  effort  upon 
the  individual  exerting  it,  or  to  its  detrimental  effect  upon 
the  fortunes  of  others  through  the  medium  of  merely 
material  forces.  For  the  time,  this  was  deemed  a  suf- 
ficient indictment.     But  competition  does  more  and  worse 

398 


THE    COST   TO   THE    COMMUNITY  399 

than  either  of  these.  Its  economic  forces  become  trans- 
muted into  ethical  ones  of  a  social  order,  and  In  that  guise 
transmitted  throughout  the  community  In  parallel  with, 
and  in  more  insidious  fashion  than,  the  original  economic 
forces.  Irh  short,  competition  does  harm  in  three  dis- 
tinct ways: 

( 1 )  It  robs  and  starves,  and  in  that  way  degenerates, 
the  Individual  producer. 

(2)  It  perverts  and  corrupts  the  individual  barterer's 
opportunity  for  ethical  development. 

(3)  It  establishes  standards  and  customs  within  the 
community  which  react  to  the  detriment  of  every  citizen, 
without  regard  to  whether  he  belongs  to  the  bargaining  or 
the  producing  classes. 

It  will  be  convenient,  and  quite  sufficient  for  the  pur- 
poses of  the  argument,  to  Investigate  these  secondary  social 
effects  of  competition  upon  our  national  standards  of  life 
under  the  topics  of  Crime,  Corruption,  Education,  Art, 
etc.,  as  representative  of  the  long  list  of  less  prominent 
fields  for  Its  reaction  into  which  this  series  might  be 
expanded.  Of  these  absent  members  only  one,  Inebriety, 
deserves  special  mention  here.  That  it  is  one  of  the  most 
direct  fruits  of  the  competitive  system,  of  the  reward  in 
the  shape  of  expanded  profit  which  we  offer  each  brewer 
and  saloon-keeper  for  his  efforts  at  expanding  his  trade, 
there  can  be  no  question.  That  all  efforts  at  Its  restric- 
tion by  law  or  public  opinion  must  fail  until  this  most 
effective  expansive  force  be  removed,  by  the  manufacture 
and  sale  of  all  alcoholic  beverages  by  those  having  no 
Interest  in  the  volume  of  trade  handled,  but  rewarded  by 
a  fixed  salary,  must  be  obvious.  That  It  is  utter  folly  to 
operate  an  industry  such  as  this,  which  all  agree  should  be 
restricted  to  the  utmost  possible,  under  the  profit-making 
system  which  Is  universally  praised  as  the  one  leading  to 


400  THE    COST    OF    COMPETITION 

the  most  rapid  expansion  of  trade  wherever  it  is  apphed, 
all  must  agree.  For  the  reactionary  process  which  has  here- 
tofore been  shown  to  enter  to  the  restriction  of  trade  con- 
ducted for  profit,  viz :  contraction  of  purchasing-power, 
cannot  operate  to  the  alleviation  of  the  liquor  traffic.  The 
attitude  of  mind  which  contemplates  inebriety  is  never  con- 
scious of  restricted  purchasing-power,  any  more  than  it  is 
of  endangered  ethics.  If  the  money  be  in  pocket,  it  buys 
and  drinks.  Thus,  it  is  plain,  the  total  restriction  of  pur- 
chasing-power due  to  all  profit-seeking,  that  in  liquor- 
selling  as  well  as  all  other  industries,  falls,  in  the  man 
overwearied  by  the  futility  of  life  and  labor  and  face  to 
face  with  temptation  toward  the  temporary  Elysium  of 
intoxication,  upon  his  purchasing-power  reserved  for  the 
necessaries  of  life.  The  harder  you  oppress  him  with  bar- 
ter the  more  beer  and  the  less  bread  he  will  buy. 

All  of  these  considerations  must  be  so  obvious  to  any- 
one who  has  at  all  succeeded  in  following  the  previous 
analysis  of  social  relationships  that  it  hardly  seems  neces- 
sary to  argue  them.  Only  the  importance  of  the  liquor- 
evil  could  warrant  it.  Nor  would  the  duty  be  evaded 
here  were  it  not  that  there  is  no  topic  concerning  which 
the  average  man  has  such  firm  preconceptions  and  conclu- 
sions, and  such  complete  confusion  of  cause  and  effect,  as 
the  liquor-question.  There  is  hardly  a  department  of 
economics  or  ethics  into  which  its  influence  or  its  reactions 
do  not  extend;  but  in  every  one  of  these  it  is  so  much  a 
matter  of  obscurity  as  to  whether  the  liquor  be  an  inflam- 
matory cause  of  other  evils  or  an  intensive  reactionary 
effect,  that  little  progress  is  to  be  made  in  the  discussion  of 
its  details.  We  have  now  pointed  out  the  fundamental 
forces  which  are  to  be  kept  in  mind  in  its  consideration. 
More  than  that  it  does  not  seem  profitable  to  attempt  here. 

In  the  development  of  the  argument  allotted  to  these 


THE    COST   TO   THE    COMMUNITY         401 

several  fields  of  ethical  activity  it  will  be  necessary,  in 
order  to  prevent  confusion,  to  carefully  define  and  some- 
what restrict  the  meaning  of  the  several  captions  within 
useful  limits.  The  word  cri7ne  will  here  be  restricted  in 
its  definition  to  refer  only  to  physical  violence,  to  ebulli- 
tion of  animal  spirits  or  passions  beyond  proper  control, 
to  misdemeanors  usually  adjudged  in  the  criminal  courts 
only. 

The  word  corruption  will  here  be  defined  as  covering 
all  crime  of  a  purely  pecuniary  nature,  whether  grand  or 
petty  larceny,  or  forgery,  whether  occurring  on  the  part 
of  a  governmental  oflScial  or  a  citizen  privately  employed. 
Such  cases  might  come  under  either  criminal  or  civil 
prosecution. 

The  word  education  is  to  be  understood  in  its  broader 
sense,  as  including  all  the  grades  and  sorts  of  educational 
institutions;  but  it  is  also  to  include  that  more  intangible 
but  far  more  effective  education  of  the  young  which  is 
exhaled  to  them  from  the  surroundings  of  their  childhood 
days,  and  the  standards  of  taste  and  of  right  or  wrong 
which  they  find  about  them  as  they  pass  through  the  form- 
ative years  of  adolescence,  than  it  is  the  more  deliberate 
and  conscious  teachings  of  later  years. 

The  word  art  is  used  to  refer  to  questions  of  public 
taste.  It  is  necessary  to  remind  the  reader  here  of  the 
difference  between  true  public  taste  and  private  taste  pub- 
licly expressed.  If  chance  has  led,  for  instance,  some  pri- 
vate citizen  to  create,  or  even  to  present  to  the  public  au- 
thorities, a  statue  of  the  St.  Gaudens  class,  a  picture  worthy 
of  Titian  or  Turner,  or  a  library-building  such  as  a  Rich- 
ardson might  have  imagined,  that  is  not  an  expression  of 
public  taste;  that  is  purely  an  individual  phenomenon.  In 
the  face  of  it  the  community  bears  the  attitude  of  passive 
acceptance,  at  the  most.     It  was  not  responsible  for  its 


402  THE    COST    OF    COMPETITION 

initiation  or  its  mold.  It  does  not  deserve  the  credit  for 
its  existence.  In  consequence,  both  the  phenomenon  and 
its  results  are  of  a  sporadic,  haphazard  and  desultoi-y 
nature.  In  their  reaction  upon  the  current  growth  of  the 
community  they  are  not  coercive.  That  they  do  exert  some 
reaction  is  not  for  a  moment  to  be  denied;  but  its  nature 
is  one  of  resistance  in  a  losing  game,  one  of  a  partial  stem- 
ming and  diverting  of  the  floodtide  of  life  which  is  pour- 
ing past  them,  quite  otherwise  intent  upon  its  real  com- 
munity-aims, than  it  is  as  the  natural  and  unconscious 
expression  of  the  main  purpose  of  the  adult  unit-life  of  the 
community  to  itself.  Public  taste  of  this  latter  sort  at  one 
time  brought  forth  the  temples  and  statues  of  ancient 
Greece,  at  another  Roman  law,  at  another  the  cathedrals 
of  central  Europe;  but  it  has  had  almost  nothing  to  do  with 
those  periodic  outflarings  of  individual  creative  genius 
which  have  illumined  almost  all  countries  and  all  ages, 
largely  without  regard  to  the  state  of  war  or  peace,  of 
wealth  or  poverty,  or  of  political  development  which  pre- 
vailed at  that  particular  time  and  place. 

It  has  already  been  pointed  out  as  a  preface  to  further 
discussion  that  the  great  bulk  of  the  producing  class 
is  hopelessly  without  taste,  although  this  same  class,  eco- 
nomically speaking,  includes  that  minority  which  leads  the 
world  in  the  highest  development  of  taste.  Further,  that 
this  minority  acquires  or  cultivates  its  taste  wholly  in  defi- 
ance of,  not  in  consequence  of,  economic  forces,  that  its 
votaries  enter  the  producing  class  because  they  possess 
too  much  taste  to  waste  their  lives  in  barter,  and  that  they 
enter  it  facing  the  certainty  of  a  life  of  comparative  pov- 
erty.^    Barter  does  not  accord  to  its  adherents  that  taste 

1  It  is  a  fact  worthy  of  serious  reflection,  in  connection  with  what  has 
already  been  said  concerning  the  continuous  recruiting  of  the  upper 
aesthetic  classes  from  the  lower,  that  the  great  majority  of  the  latter's 
individuals,  in  their  efforts  at  improving  their  condition,  should  seek  im- 


THE    COST   TO   THE    COMMUNITY         403 

the  chance  for  which  it  removes  from  the  lower  classes, 
any  more  than  it  sav^es  to  them  the  wealth  of  which  it  robs 
us  all.  Barter  is  inimical  to  taste  and  cultivation  in  every 
direction;  it  crushes  it  from  the  producing  classes  by  star- 
vation and  from  the  bargaining  classes  by  plethora.  The 
entire  history  of  art,  science  and  education  on  the  one  hand 
and  of  barter  on  the  other  reveals  relentless  warfare 
between  the  two.  The  former  have  developed  only  as 
they  have  been  able  to  prevail  over  the  latter.  The  classi- 
fication of  individuals  in  their  direct  relation  to  the  com- 
petitive system  on  questions  of  aesthetic  development  is 
thus  complete.  It  is  the  indirect  relations  which  lie  quite 
outside  this  list  and  which  are  noted  in  paragraph  (3) 
which  now  concern  us.  Under  this  head  it  seems  proper 
to  look  a  little  more  broadly  at  the  community  as  a  whole 
for  further  evidence  as  to  the  extent  to  which  the  individual 
is  unconsciously  affected  by  the  influence  of  competitive 
effort. 

Crime  2 

Crime  is  the  natural  resultant  of  two  forces,  which  act 
in  opposite  directions: 

( 1 )  Temptation.  This  must  be  the  greater  of  the  two, 
though  not  necessarily  great  to  other  eyes  than  those  of  the 
tempted. 

(2)  Lack  of  will-resistance.  This  must  be  the  lesser 
of  the  two,  though  not  necessarily  slight. 

proved  skill  in  productive  art,  at  all  sorts  of  technical  schools,  rather  than 
the  cultivation  of  skill  in  barter.  When  we  contemplate  the  comparative 
poverty  of  reward  for  the  former  and  the  inflated  pecuniary  returns  for 
the  latter,  when  we  realize  the  comparative  forces  of  this  artificial  situa- 
tion, the  comparatively  slight  response  of  the  youth  of  the  land  to  barter's 
gilded  bribes  reveals  nakedly  the  direction  of  the  natural  biological  tend- 
encies of  the  race  and  renews  our  faith  in  man.  It  is  not  in  human  nature 
at  all  to  turn  willingly  away  from  the  study  of  God's  footstool  and  the 
cultivation  of  His  handicraft  toward  the  savor  of  the  flesh-pots. 

-  For  a  fuller  discussion  of  the  growth  of  crime,  see  Part  I.,  page  301. 


404  THE    COST    OF    COMPETITION 

Temptation  arises  from  physical  desire  refused  natural 
gratification.  For  the  clear  understanding  of  this  fact 
there  must  first  be  annihilated  the  common  error,  viz. : 
That  ungratified  desire  impels  the  individual  toward  the 
lawful  means  of  gratification. 

The  common  attitude  toward  the  unfortunate,  for 
instance,  Is  that  the  stimulus  of  hunger  is  needed  in  order 
to  make  them  work,  for  they  are  so  very  lazy.  Yet 
equally  common,  and  in  the  same  minds.  Indeed,  occurs 
the  opinion  that  the  unfortunate  mu'st  always  be  expected 
to  steal,  etc.,  for  their  hunger,  coupled  with  their  laziness, 
naturally  causes  them  to  shun  work  and  to  turn  Instead  to 
criminality.  These  two  opposite  and  Inconsistent  atti- 
tudes are  assumed  in  turn  by  the  same  people,  by  well- 
meaning  people,  in  explaining  to  themselves  how  it  is  that 
some  are  hungry  and  some  unfortunate. 

Indeed,  these  superficial  doctrines  are  both  needed,  at 
least  for  the  salving  of  conscience;  for  in  no  other  way  can 
the  doctrine  that  the  suffering  are  deservedly  so,  and  are 
beyond  our  responsibility,  possibly  be  sustained.  But 
for  an  honest  understanding  of  the  matter  the  first  question 
to  be  disposed  of  is  this :  Does  want.  In  the  long  run,  drive 
the  average  man  to  work  or  to  shirk  work?  Does  work 
need  to  be"  "  Induced  "  out  of  a  man;  or  Is  It  a  natural  phe- 
nomenon, the  natural  result  of  being  fed  and  rested, 
needing  only  to  be  let  out? 

Primarily,  the'  stimulus  necessary  to  any  action  is  a 
psychic  impulse  In  that  direction.  When  one  Is  hungry 
he  tends  to  eat,  not  to  work;  when  he  is  tired  he  tends  to 
rest,  not  to  make  beds;  when  he  possesses  surplus  strength 
he  tends  to  move  about  and  do  something.  This  rule 
applies  throughout  all  life.  The  great  bulk  of  all  activity 
results  from  such  Impulses. 

Quite  Incidental  to  this  reaction  Is  the  purely  Intellec- 


THE    COST   TO   THE   COMMUNITY  405 

tual  observation  that  hunger,  in  order  that  it  may  be  satis- 
fied the  next  time  it  arises,  should  serve  as  a  signal  for  the 
direction  of  the  n-ext  spontaneous  impulse  to  do  something 
into  channels  productive  of  food.  But  this  conclusion  of 
pure  reason  is  removed  from  spontaneous  naturalness  by 
three  distinct  steps,  namely: 

{a)  It  is  useful  only  for  the  future.  When  one  is 
hungry  he  not  only  feels  no  impulse  to  go  to  work  and  get 
something  to  eat;  but,  by  all  the  canons  of  hygiene  and 
anti-suicide,  he  ought  to  be  allowed  to  do  so.  He  ought 
first  to  be  fed  and  rested  until,  the  cycle  having  made 
another  revolution,  he  feels  like  working  again.  Then 
only  is  this  ordinance  of  value,  as  a  guide  to  that  effort. 
Indeed,  it  is  the  honorable  attempt  to  evade  this  natural 
fact  which  leads  to  so  many  broken  good  resolutions. 
When  the  pressure  is  upon  one  it  is  easy  enough  to  carry 
out  this  intellectual  deduction  to  do  differently  next  time; 
but  when  the  time  comes  the  action  depends  hardly  at  all 
upon  previous  conclusions  as  to  desirability,  but  chiefly 
upon  the  fund  of  physical  and  moral  strength  available  for 
immediate  demand. 

{h)  It  depends  upon  the  certainty,  for  this  future  con- 
tingency, that  the  work  expended  now  will  then  bring 
back  the  desired  result.  Here  is  where  the  foundation 
goes  out  from  under  this  entire  philosophy,  under  present 
economic  conditions.  The  larger  part  of  Part  I  was 
devoted  to  showing  how  the  prime  characteristic  of  our 
present  commercial  civilization  consists  in  the  certainty  on 
the  part  of  the  producer  that  he  will  have  return  to  him 
only  some  thirty  per  cent,  of  his  productivity,  and  the  com- 
plete uncertainty  on  the  part  of  the  barterer  as  to  what  pro- 
portion will  return  to  him  at  all.  Indeed,  it  seems  plain 
that  this  fact  constitutes  an  all-essential  step  between  the 
pressure  of  economic  starvation  or  submergence,  on  the 


4o6  THE    COST    OF    COMPETITION 

one  hand,  and  that  moral  degeneracy  which  was  ascribed 
to  it  as  its  effect  in  those  pages.  Mere  momentary  pres- 
sure of  want  or  pain  seldom  drives  men  to  the  attitude  of 
the  criminal.  We  have  plenty  of  evidence  as  to  this  from 
sailors  cast  away  in  open  boats  or  from  soldiers  in  battle 
or  afterwards;  although  the  former  may  become  cannibals, 
for  instance,  it  is  with  a  grave  and  deliberate  sense  of  what 
they  do,  and  it  is  done  with  justice  and  impartiality.  But 
let  either  continued  injustice  or  complete  uncertanity  be  a 
factor  in  the  situation,  let  time  do  its  work,  and  men 
become  demons.  With  the  lower  classes  it  is  their  experi- 
ence, too  often  repeated,  that  faithful  effort  does  not  bring 
gratification  to  natural  appetite  which  produces  in  them 
not  only  the  unnatural  appetite  but  the  disposition  to 
gratify  even  natural  appetite  vengefully,  at  someone  else's 
cost  rather  than  otherwise.  With  the  upper  classes  it  is 
the  element  of  chance  in  the  distribution  of  the  material 
rewards  of  life,  now  pouring  out  affluence  with  prodigal 
hand,  now  condemning  to  immediate  penury  the  nature 
long  nurtured  to  luxury,  which  creates  in  these  rriore 
prominent  levels  of  society  the  public  conscience  of  the 
gamester  and  the  adventurer  where  should  prevail  the 
sobriety  of  the  man  certain  of  the  fundaments  of  life. 

(c)  The  phenomenon  is  purely  intellectual.  But  when 
one  is  under  pressure  of  exhausted  vitality  the  intellect  does 
not  work.  The  unconscious  impulse  then  takes  charge  of 
the  body  and  directs  operations.  Brute  instinct  then 
replaces  reason, — and,  indeed,  to  a  better  ultimate  solution 
of  the  situation.  Force  cuts  the  Gordian  knot  which  self- 
ish intrigue  had  tied.  The  whirlwind  springs  from  the 
seed  wind-sown,  and  scours  and  cleanses  an  atmosphere 
choked  with  unjust  and  paralyzing  dogma. 

Thus,  secondarily  to  the  primordial  and  direct  interac- 
tion between  impulse  and  deed,  stimulus  to  action  may  be 


THE    COST   TO    THE    COMMUNITY  407 

derived  more  indirectly  from  the  original  sensation  by  an 
intermediate  activity  of  the  intellect.  But  all  such  sec- 
ondary transmutations  of  psychic  energy,  when  compared 
with  the  primary  impulse,  are  both  weak  and  limited  in 
duration.  The  man  continuously  without  appetite  may 
force  himself  to  eat  for  a  while;  but  he  does  not  eat 
heartily,  his  food  does  not  sustain  him  and  he  does  not  long 
continue  to  eat.  Eventually  the  ability  to  force  down  food 
disappears  and  he  succumbs.  Nothing  can  help  him 
but  a  natural  appetite.  And  the  same  is  true  of  his 
work. 

Widespread  and  prominent  at  present,  among  the  men 
of  education  and  power  of  the  land,  is  the  doctrine  of  the 
conservation  of  energy.  The  futility  of  the  dreams  of 
the  inventors  of  perpetual  motion  is  the  subject  of  much 
preaching  and  not  a  little  ridicule.  More  recently,  indeed, 
has  appeared  and  found  wide  favor  the  sermon  against 
what  has  been  called  "  perpetual  motion  of  the  second 
class,"  referring  to  the  frequent  attempts  to  bring  about 
energetic  phenomena  without  regard  to  the  "  Second  Law  " 
of  energetics,  without  a  drop  in  intensity  of  the  energy  of 
the  primary  form.  But,  strange  to  say,  it  is  in  these  same 
walks  of  life  that  appears  the  most  widespread  worship  of 
a  doctrine  which  is  fundamentally  opposed  to  and  incon- 
sistent with  both  of  these  natural  principles  just  mentioned. 
This  doctrine  is  the  one  which  proclaims,  as  a  natural 
fact,  what  is  called  the  "  free  will  "  of  man,  or  the  power 
to  choose  othenvise  than  is  dictated  by  the  natural  reaction 
of  previously  stored  configuration  to  momentary  environ- 
ment, othenvise  than  by  natural  law,  otherwise  than  with 
psychic  energy  conserved,  with  psychic  intensity  depressed. 
This  doctrine  of  the  free  power  of  the  individual  to  choose 
amounts  to  nothing  more  than  the  belief  that,  although 
under  this  lav/  of  the  conservation  of  energy  must  come  not 


4o8  THE    COST    OF    COMPETITION 

only  every  other  living  creature  and  inanimate  object  in 
the  known  universe,  and  each  impulse  which  leads  either 
of  them  into  any  activity  whatever,  but  also  (so  far  as  He 
has  yet  vouchsafed  us  evidence)  the  Supreme  Power  Him- 
self, yet  that  man  stands  out  alone  from  all  the  rest  of  the 
universe  in  this  respect.  It  is  almost  universally  believed 
that  he  can  create  both  the  impulse  and  the  power  within 
himself  to  do  what  he  chooses, — or  at  least,  even  if  he  be 
limited  in  his  ultimate  degree  or  scale  of  powers,  that  he 
possesses  the  pozver  to  choose. 

Does  he?  This  is  the  question  which  lies  at  the  very 
foundation  of  modern  social  ethics.  Viewed  from  purely 
ethical  premises,  as  a  matter  of  opinion,  emotion,  experi- 
ence, etc.,  it  permits  of  endless  discussion.  Viewed  from 
the  standpoint  of  a  Baconian  philosophy,  however,  under 
the  demand  that  it  be  in  consistency  with  our  many  other 
never-to-be-surrendered  deductions  from  laboratory  and 
world  experience,  its  answer  is  as  clean-cut  as  light  and 
shadow.  Individual  will  of  choice  is  as  much  a  natural 
phenomenon  of  an  energetic  character  as  is  sunlight  or 
electricity.  It  must  fall  just  as  inevitably  under  the  fun- 
damental laws  of  energetics.  To  doubt  this  is  supersti- 
tion,— an  assumption  outside  the  facts.  If  this  be  true, 
then  "free  "  will  (and  this  means  the  choice  precedent  to 
action,  not  the  active  impulse)  cannot  possibly  be  created 
from  nothing,  nor  can  it  grow  spontaneously  from  nothing. 
It  can  be  created,  and  it  can  grow  spontaneously  after 
creation;  but  only  as  corn  or  aught  else  grows,  after  the 
planting  of  seed  in  a  favorable  environment,  and  by  the 
absorption  from  that  environment,  to  the  last  particle,  of 
the  materials  of  which  it  consists.  Indeed,  the  only  man- 
ner of  its  "original  "  creation,  as  of  any  other  thing  organic 
or  inorganic,  is  by  the  accordance  to  it  of  that  favorable 
environment  which  will  lead  to  growth. 


THE    COST   TO    THE    COMMUNITY         409 

When  we  wish  to  grow  corn,  for  instance,  do  we  find  it 
sufficient,  or  even  of  assistance,  to  exert  a  downward  pres- 
sure on  the  ground  about  where  it  is  planted,  with  the  idea 
of  forcing  it  out  the  faster?  That  method  might  pro- 
duce a  fountain,  but  scarcely  living  corn.  Yet  this  is  the 
method  applied  to  the  human  will  by  believers  in  the  ethics 
of  the  present  wage-system.  Or  do  we,  after  the  corn  is 
sprouted,  erect  a  derrick-tackle  and  fall  above  it  and  pro- 
ceed to  pull  it  upwards,  that  it  may  grow  the  faster?  That 
will  give  us  dead  stumps,  but  scarcely  living  corn.  Yet 
that  is  the  method  of  the  university-settlement  and  the 
organized  charities;  it  is  at  least  the  method  of  many  a 
pulpit.  Or  do  we  let  the  corn  sow  itself  from  the  stalk 
and  then  leave  it  there,  saying:  "  Leave  it  alone.  It  can 
grow  itself  if  it  only  wants  to.  It  is  none  of  our  business. 
And  besides,  it  won't  be  worth  anything  unless  it  has  to 
fight  its  way  up."  Yes,  that  will  produce  corn;  corn  able 
to  fight  its  way  up,  at  least,  corn  such  as  the  aborigines 
had,  but  not  just  the  sort  of  corn  expected  of  modern 
civilization ;  and  when  we  come  to  the  eating  of  it,  it  devel- 
ops, to  our  sorrow,  that  its  cultivation  was  indeed  our  busi- 
ness, after  all. 

All  of  these  remarks  apply  without  modification  to  the 
cultivation  of  the  human  will,  and  to  the  latter's  choice 
between  right  and  wrong.  Each  is  a  natural  organic 
phenomenon.  Like  all  such,  it  will  grow  and  flourish, 
indeed  it  will  insist  upon  doing  so,  from  an  incentive 
inherent  within  itself  and  not  possibly  to  be  exaggerated 
by  external,  artificial  means,  until  it  meets  the  limit  imposed 
upon  it  by  its  environment;  and  that  environment  consists, 
in  the  present  case,  almost  wholly  of  material  supplies 
and  artificial  human  relationships.  It  needs  no  coax- 
ing. Clumsy  attempts  at  that  only  do  it  harm.  If  we  are 
dissatisfied   with    its   progress    our    indignation    must   be 


4IO  THE    COST    OF    COMPETITION 

directed  against  the  field  which  we  have  prepared  for  it, 
not  against  it. 

The  explanation  of  this  widespread  inconsistency 
between  our  beliefs  in  material  and  in  psychic  energetics  is 
fourfold.  In  the  first  place  comes  the  general  trend  of 
human  evolution  in  ethics,  which  appears  so  prominently 
In  all  human  history:  the  fact  that  the  race  began  the  life 
which  distinguishes  it  from  the  beasts,  the  life  of  imagina- 
tion and  abstract  idea,  by  baldly  assuming  that  it  was  the 
center  of  the  universe.  In  the  beginning  all  things,  appar- 
ently, centered  about  man.  He  was  the  object  of  all 
natural  phenomena.  The  storms  and  earthquakes  which 
harmed  him  were  sent  by  deities  imbued  with  hatred  and 
ferocity.  The  gentle  rains  and  favoring  breezes  were  the 
.deeds  of  spirits  kindly  in  their  nature.  The  good  deities 
bore  the  form  of  man  at  his  best;  the  evil  ones  the  appear- 
ance of  man  deformed  by  passion.  All  was  purely  per- 
sonal. So,  since  these  gods  were  but  men  more  human 
than  men,  more  given  to  partial  love  or  impartial  hatred, 
more  clumsy  in  their  attempts  at  vengeful  justice,  man  then 
stood  to  himself  as  not  only  the  king  of  all  creation,  but  as 
the  creator  of  all  current  phenomena.  The  seasons  made 
their  rounds  favorably  or  unfavorably,  winds  blew,  disease 
arose  or  disappeared,  war  or  peace  held  sway,  according 
to  whether  man's  free  acts  had  pleased  or  angered  these 
less  than  childish  gods.  And  so,  when  he  opened  his 
eyes  to  the  stars  of  the  heavens  as  worlds  outside  bur  own, 
he  assigned  to  them,  most  naturally,  imaginary  positions 
and  orbits  in  a  periphery  of  which  the  earth  was  a  center. 
The  entire  astronomical  philosophy  which  Copernicus  and 
Galileo  must  overthrow  before  the  wondrous  fruits  of 
modern  astronomy  might  be  enjoyed  was  nothing  more 
than  a  natural  expression  of  this  prehistoric  racial  assump- 
tion that,  because  sensation  and  consciousness  lie  near  at 


THE    COST    TO   THE    COMMUNITY  411 

home  to  us,  man  must  be  first  and  free  and  all  nature 
second  and  sequent. 

It  seems  scarcely  worth  while,  and  yet  it  is  necessary,  to 
call  attention  to  the  fact  that  the  entire  progress  of  human 
knowledge  and  power  has  been  the  result  of  the  slow  denial 
of  this  superstitious  philosophy,  step  by  step;  of  the  slow 
reduction  of  man's  earth  from  its  assumed  position  as  the 
center  of  the  astral  universe  to  its  present  acceptance  as  a 
mere  speck  of  cosmic  dust,  lost  to  all  vision  from  other 
worlds  than  ours,  not  in  infinite  darkness  but  in  an  immen- 
sity of  light  and  of  finite  dimension  inconceivably  greater 
than  it;  of  the  more  rapid  but  equally  hard- fought  reduc- 
tion of  man  himself  from  his  ancient  position  as  king  and 
cause  of  gods,  beasts  and  whirlwinds  to  his  modern  accept- 
ance as  the  latest  result  of  a  chain  of  natural  evolution,  of 
a  chain  beginning  in  purely  inorganic  forms  of  energy  and 
passing  through  all  the  long  series  of  lowly  slimes  and  hor- 
rid beasts,  through  savagery  itself,  to  the  latest,  the  young- 
est and  the  most  delicately  balanced  offspring  of  them  all: 
Man  and  his  Civilization. 

In  the  long  war  which  scientific  progress  has  waged 
throughout  the  centuries  with  this  primordial  superstition 
of  the  species,  in  order  to  bring  out  the  tiaith,  in  order  to 
confer  upon  man  that  power  which  is  wielded  only  by 
humility,  in  order  tO'  force  into  slow  human  habits  of 
thought  the  ingrained  conception  that  mind  possesses  no 
power  whatever  over  matter,  but  succeeds  only  as  it  obedi- 
ently follows  matter's  law-abiding  activities, — in  this  long 
war  waged  for  the  good  of  the  vanquished  the  last  ditch 
to  be  fought  is  this  last  survival  of  the  ancient  superstition, 
this  modern  blind  faith  in  the  free  autonomy  of  the  human 
will. 

In  the  second  place,  viewing  the  situation  more  in  the 
light  of  the  particular  questions  of  our  own  day  and  gener- 


4T2  THE   COST   OF   COMPETITION 

ation,  this  belief  finds  support  for  its  continuance  in  the 
fact  that  the  average  man  very  plainly  does  not  possess 
sufficient  initiative  to  develop  the  industry  or  the  character 
or  the  something  which  is  plainly  needed  to  bring  to  him  a 
competence  in  life.  We  do  not  see  that  he  is  already 
drudging  at  a  rate  of  productivity  several  times  as  great 
as  the  Income  which  he  enjoys.  We  see  only  that,  appar- 
ently, he  does  not  do  enough.  We  do  not  see  that,  no  mat- 
ter how  much  more  he  may  produce  than  now,  barter  will 
absorb  and  destroy  the  bulk  of  the  increase,  until  it  leaves 
him  almost  the  same  dull  drudge  as  now.  We  call  him 
lazy.  Does  that  not  mean  that  he  lacks  something, — 
something  which  has  been  squeezed  out  of  him,  drop  by 
drop,  while  the  rent  and  the  interest  and  the  dividends 
and  the  barter-cost  were  also  being  squeezed  out  of  him? 
In  the  third  place,  the  majority  of  those  who  speak  so 
deprecatingly  of  the  laziness  and  improvidence  of  the 
laboring  classes,  and  of  the  need  for  an  inducement  for 
them  to  work,  cannot  be  listened  to  as  impartial  authori- 
ties; for  they  themselves  belong  to  the  bargaining  class, 
usually  as  employers.  The  situation  Is  then  a  palpable 
one, — and  hardly  to  the  barterer's  credit,  when  once  seen 
truly  outlined.  Since  they  receive,  as  gross  profits,  all 
which  the  laborer  can  be  induced  to  produce  above  the 
starvation-wage  which  will  keep  him  on  hand,  of  course  he 
is  lazy !  It  Is  plain  that  he  ought  to  do  twice  as  much  as 
he  does;  for  would  not  the  barterer  then  receive  four 
times  what  he  does  now :  the  one-third  of  the  original  pro- 
duce plus  the  three-thirds  of  Its  duplication?  It  Is  no 
reply  to  this  to  say  that  If  the  laborer's  productivity  Increase 
his  wages  will  Increase..  The  latter  Is  thirty  per  cent,  or 
less  of  the  former.  The  employer  may  think  that  the 
Supreme  Intelligience  ought  to  have  constructed  laboring 
nature  so  that  an  Increase  of  three  units  of  income  would 


THE    COST   TO   THE   COMMUNITY         413 

result,  after  complex  and  mysterious  metabolism  within 
the  laborer,  in  an  increase  of  ten  units  in  productivity,  that 
the  barterer  might  enjoy  the  other  seven,  or  at  least  what 
is  left  of  it  after  barter-cost  is  paid.  But  it  happens  that 
the  Supreme  Intelligence  does  not  act  in  that  way.  In 
fact,  He  Himself  respects  the  law  of  the  conservation  of 
energy,  and  puts  seed  and  opportunity  in  before  He  expects 
fruit  to  come  out.  Indeed,  He  even  justifies  the  use  of 
fertilizers !  Is  it  so  wonderful,  then,  that  from  the  ham- 
pering shackles  of  such  a  material  necessity  the  employers 
of  the  land  should  not  have  found  themselves  entirely 
freed? 

In  the  fourth  place,  and  of  not  the  least  significance, 
lies  the  fact  that  the  energy  involved  in  the  human  will  is 
of  a  potential  character  and  therefore,  like  all  potential 
forms  of  energy,  invisible  except  to  the  trained  eye.  Stored 
in  each  human  organism  is  a  fund  of  potential  will,  char- 
acter, conscience,  whatever  you  please  to  call  it,  which  has 
been  accumulated  partly  by  the  life  of  preceding  genera- 
tions and  partly  by  its  own  life, — not  put  in  by  artificial 
human  charity,  whether  organized  or  not,  but  absorbed 
into  itself  from  the  soil,  the  air  and  the  sun,  by  the  mere 
fact  of  unconscious  life  and  spontaneous  growth.  To  the 
stock  thus  found  upon  the  scene  the  life  in  question  adds 
by  accumulation  or  diminishes  by  dissipation  only  accord- 
ing to  the  simple  fact  of  whether  it  receives  more  than  it 
disburses  or  is  forced  to  exert  more  than  it  receives. 

Under  the  stimulus  of  reason  this  fund  of  potential  life- 
energy  can  be  drawn  upon  to  divert  or  stay  in  action  the 
natural  tendencies  of  life  in  the  face  of  environment  for  a 
certain  limited  period.  At  the  end  of  that  time  the  resist- 
ance is  gone,  animal  instinct  resumes  its  sway  and  the  life- 
action  becomes  again  in  all  senses  natural.  Ten  days  in 
an  open  boat,  they  say,  will  make  a  cannibal  of  any  man. 


414  THE    COST    OF    COMPETITION 

Whoever  has  seen  Miss  Terry's  impersonation  of  Mar- 
guerite before  Faust's  casket  of  jewels  has  applauded  a 
revelation  of  this  process,  the  finest  touch  of  the  human  in 
the  entire  play:  The  natural  desire,  the  promptings  of  con- 
science, the  self-reminders  of  rules  of  conduct  learned  by 
rote  since  infancy,  the  telling  of  the  beads  for  protection 
from  temptation :  all  ending  in  the  inevitable  surrender, 
"Oh!  I  should  die  if  I  didn't  look!  "  All  the  criterions 
of  art  are  based  upon  the  recognition  of  the  truth  of  her 
exclamation,  that  all  that  was  strongest  and  best  and  truest 
in  the  character  would  actually  have  been  dead,  she  would 
not  hav^e  been  worth  looking  at,  had  she  succeeded  in 
permanently  overruling  the  natural  impulses  of  her  life  by 
resource  to  artificial  rules  of  propriety. 

So  it  is  with  labor.  A  man  may  force  himself  to  work, 
for  a  longer  or  shorter  but  a  strictly  limited  period,  and 
with  a  limited  efficiency,  when  he  does  not  spontaneously 
desire  work.  He  may  work  because  he  is  hungry,  or  be- 
cause his  family  is  hungry,  or  because  his  Sunday's  sermon 
says  that  he  ought;  but  he  does  not  do  it  long  nor  well.  He 
is  just  as  purely  a  pathological  case  as  is  the  man  who  forces 
himself  to  eat  without  appetite.  The  man  who  doesn't 
like  his  work  is  just  as  sick  as  he  who  doesn't  like  his  din- 
ner. Both,  if  they  force  themselves  against  their  natural 
impulses,  become  as  foolish  and  as  ineffective  as  is  any 
other  sick  man  who  tries  to  act  like  a  well  one. 

All  work  worth  the  doing,  worth  the  world's  apprecia- 
tion, capable  of  preservation  and  incorporation  into  the 
complete  structure  of  the  future,  is  done  for  the  love  of  it. 
This  "  love  "  may  be,  in  some  classes  of  labor,  most 
animal  and  monotonous  in  aspect.  It  may  be  stunted  into 
mere  physical  habit.  But,  none  the  less,  the  work  is  done 
because  the  worker  feels  like  doing  it,  or  else  it  is  not  fit 
to  keep:  which  goes  to  show,  in  part,  how  much  of  the 


THE    COST   TO   THE    COIVIMUNITY         415 

elaborate  and  pretentious  pottering  of  the  present  genera- 
tion must  be  undone  by  the  next  before  progress  can  be 
made.  The  greater  and  the  more  spontaneous  the  desire, 
for  work,  the  more  unselfish  and  delicate  the  character  of 
the  love  of  the  doing,  on  the  other  hand,  the  greater  and 
more  permanent  will  be  its  value.  Work  inspired  by 
desire  for  cash  does  not  come  under  this  head. 

Life  is  commonly  described  as  a  little  daily  cycle,  in 
which  one  does  a  little  work  that  one  may  acquire  a  little 
money,  to  buy  a  little  food,  to  eat  which  makes  one  a  little 
sleepy,  to  gratify  which  arouses  a  little  appetite,  which 
calls  for  a  little  more  work,  etc.,  etc.  That  is  the  com- 
monly and  naturally  accepted  view  of  life,  as  it  appears 
distorted  in  the  turbulent,  heated  atmosphere  of  commer- 
cial competition  in  which  we  live. 

The  picture  is  half  true.  Life  is  a  cycle.  Life  moves 
in  a  daily  round,  which  accomplishes  nothing  permanent 
which  is  immediately  visible  to  the  doer.  Its  reward  is 
solely  the  love  of  living.  But  the  other  half  of  the  pic- 
ture is  false :  in  each  pairing  of  cause  and  effect  the  cart 
has  been  placed  before  the  horse.  The  true  statement 
is  just  the  reverse:  that  one  wakes  in  the  morning  with 
surplus  energy  calling  for  outlet;  that  the  gratification 
of  this  Impulse  creates  both  appetite  and  fatigue;  that 
incidentally,  if  justice  prevail,  the  labor  has  made  avail- 
able the  means  for  gratifying  both  hunger  and  fatigue; 
and  that  their  gratification  with  wholesome  food  and  rest 
brings  zest  for  more  productive  labor.  Each  act  in  turn 
is  impelled  by  the  preceding,  not  by  the  following,  one 
of  the  cycle. 

Thus  Is  the  cycle  complete.  It  may  be  extended  so  as 
to  bring  in  all  the  diversions  and  refinements  of  life;  if 
each  enter  in  proper  proportion,  the  law  of  mutual 
Impulse  holds  good.     The  primary  law  of  human,  as  of 


4i6  THE    COST    OF    CO!MPETITION 

material,  existence  is  that  of  the  conservation  of  energy: 
Nothing  can  appear  unless  something  else  commensurate 
in  quantity  and  quality  has  previously  disappeared  to  fur- 
nish It.  There  can  be  no  work  done,  no  bread  nor  steam- 
yachts  nor  madonnas  created,  unless  the  human  shell 
graven  with  the  divine  stamp  has  been  previously  sup- 
plied with  a  stock  of  energy  to  work  with  and  upon. 
Schubert,  for  Instance,  was  denied  this  prerequisite;  he 
starved  to  death  at  thirty-four.  Who  can  measure  what 
the  world  lost  thereby?  The  dead  past  Is  burled  with  Its 
dead.  God  will  grow  more  Schuberts,  or  the  equivalent. 
It  Is  man's  prime  business,  now  that  he  pretends  to  be 
civilized  and  Christian  and  (greatest  pride  of  all!)  effi- 
cient, to  see  to  it  that  they  are  fed  when  born;  at  least  to 
see  to  It  that  they  are  not  robbed. 

When  the  continuity  of  the  cycle  Is  Interrupted  the 
impulse  to  natural  life  becomes  perverted  into  Impulse  to 
crime.  The  forcible  removal  of  any  portion  throws  the 
rest  out  of  balance.  For  instance,  It  is  plain  that  a  man 
given  opportunity,  or  required,  to  experience  all  of  the 
other  portions  of  life  except  sleeping  would  very  quickly 
become  ill  and  not  amenable  to  normal  requirements.  Not 
knowing  the  cause,  his  neighbors  would  call  him  at  first 
irritable,  lazy  and  erratic;  ultimately,  if  he  had  not 
already  been  imprisoned  for  crime,  he  would  be  adjudged 
Insane.  And  yet,  all  that  he  needed  was  the  opportunity 
to  round  out  his  life-cycle  Into  balance. 

In  the  present  discussion  we  are.concerned  with  the  evil 
results  of  Interference  with  only  two  Items  of  the  cycle: 
work,  and  the  preservation  to  the  laborer  of  the  value  of 
his  product.  All  other  factors,  as  they  enter,  will  be 
treated  as  corollaries. 

From   the   economic   discussion   of   Part   I     it   became 


THE    COST   TO   THE    COMMUNITY  417 

clear  that  an  inevitable  feature  of  the  competitive  organiza- 
tion of  society  is  the  enforced  idleness  of  a  certain  definite 
portion.  To  another  portion  is  accorded  less  than  the 
full  value  of  its  productivity.  To  both,  upon  a  differing 
scale,  is  denied  the  proper  food  for  life  and  growth:  an 
income  commensurate  with  its  natural  individual  produc- 
tivity. Therefore,  while  natural  physical  growth  creates 
a  continuous  current  of  fresh  life  upward,  from  the  lower 
to  the  upper  levels  of  society,  economic  forces  create  a 
simultaneous,  parallel,  but  downward,  flow  of  life  from 
the  upper  to  the  lower  levels,  to  the  starvation-wage  level 
and  ultimately  into  the  lowest  level  of  all,  that  of  the 
enforcedly  idle.  Both  economically  and  morally  speak- 
ing, this  flow  is  from  success  down  into  mere  competency, 
from  competency  to  incompetency  and  from  incompetency 
to  crime. 

Herein  lies  the  key  to  the  understanding  of  all  crimi- 
nality. Here  is  the  raw  material  for  the  manufacture  of 
criminals;  men  and  women  still  unstarved,  still  retaining 
physical  impulses :  to  eat,  to  rest,  to  be  amused,  to  repro- 
duce; yet  all  gratification  denied  them  except  that  attained 
unlawfully.  The  wonder  is,  not  that  there  is  so  much 
crime,  but  that  there  is  so  little ! 

Just  above  this  desperate  class  of  the  enforcedly  idle 
lies  the  much  larger  one  of  the  starvation-wage.  They 
are  not  altogether  desperate.  They  can  exist,  even 
honestly;  but  the  existence  is  of  the  barest.  Legal  grati- 
fication of  desire  for  aught  but  the  necessaries  is  denied. 
They  are  constantly  under  temptation.  Natural  desire 
for  better  things,  sharp,  raw  hunger  for  things  which  they 
see  possessed  by  others  about  them,  is  crushed  by  contact 
with  an  artificial,  inflated  institution.  Is  it  so  strange 
that  the  institution  should  sometimes  be  punctured?  To 
this  class  the  conclusions  to  be  drawn  as  applying  to  the 


4i8  THE    COST    OF    COMPETITION 

enforcedly  Idle  apply  with  only  less  force.  The  differ- 
ence is  in  degree,  not  In  kind.  The  temptation,  the  tend- 
ency, the  inevitable  result,  are  all  there.  The  speed 
with  which  they  act  and  react  only  is  lessened. 

At  the  other  end  of  the  vertical  scale  of  economic 
society  exist  men  and  women  artificially  tempted  to  little 
work  and  to  overgratification.  The  actual  competitors 
work  hard  enough,  and  hence  contribute  few  of  their 
members  to  the  ranks  of  crime.  But  their  families  and 
their  grandchildren,  inheriting  unearned  ease  and  dis- 
torted appetite,  with  surplus  cash  to  be  gotten  rid  of, 
stand  as  the  source  of  the  temptation.  The  great  bulk 
of  existent  crime  is  hired  into  existence  by  this  unearned 
surplus  of  cash  accruing  from  past  competition. 

It  is  a  fundamental  law  of  life,  which  can  be  stated 
only  briefly  here,  that  It  Is  elastic.  Pressure  upon  it  dis- 
torts it,  but  begets  resistance.  For  instance,  the  fertility 
of  the  maple-tree  or  the  salmon  arouses  wonder.  Evolu- 
tionary science  explains  that  the  chances  of  survival  of 
maple  or  salmon  seed  are  so  slight  that  this  enormous 
fecundity  is  needed,  to  prevent  extinction.  It  is  usually 
quite  forgotten,  among  the  laity,  that,  according  to 
basic  evolutionary  law,  the  fecundity  is  there  because  it 
is  created  by  the  environment;  that,  in  other  words,  what- 
ever may  be  the  external  chances  against  survival,  they 
will  exterminate  all  maples  or  salmon  not  exceeding  them. 
Therefore,  if  the  pressure  against  survival  Increase,  the 
fecundity  will  Increase;  the  fecundity  can  decrease  only 
when  the  environment  becomes  more   favorable. 

This  law  is  nowhere  so  well  exemplified  as  in  human 
life.  As  attention  is  turned  from  the  levels  of  society 
where  the  chances  of  survival  are  more  favorable  to  those 
where   the   pressure    against    life    is   more   severe,    there 


THE    COST   TO   THE    COMMUNITY         419 

becomes  obvnous  a  greater  insistence  upon  survival,  not 
only  of  the  individual  but  of  the  race. 

As  to  the  individual,  for  his  self-preservation  he  becomes 
more  brutal,  more  aggressive;  his  finer  parts  are  absorbed 
in  an  increase  of  animal  strength  and  of  combativeness, 
in  decrease  of  sensitiveness.  He  ceases  to  love  peace  and 
beauty;  he  prefers  prize-fights.  His  instinctive  percep- 
tion of  the  abstract  rights  of  the  more  delicate  to  live  are 
lost  sight  of  in  a  concentration  of  all  instinct  into  an 
intense  insistence  upon  self-preservation.  An  altruist  of 
the  highest  order,  as  already  pointed  out,  in  his  relations 
to  his  weaker  fellows  who  are  unable  or  unwilling  to  dis- 
pute his  superiority,  the  slightest  .aggressive  affront  from 
one  possibly  more  powerful  is  resented  with  a  violence 
characteristic  of  the  .brute. 

As  to  the  race,  for  its  preservation  the  reproductive  func- 
tions of  the  individual  become  more  active  and  insistent. 
The  great  size  of  the  average  family  of  the  lower  classes 
has  long  been  remarked;  the  too  small  size  of  the  college- 
graduate's  family  is  even  now  under  public  discussion. 

These  facts  are  not  only  natural,  they  are  wholesome 
and  essential  to  the  preservation  of  the  race.  They 
reveal  stability  of  equilibrium.  Otherwise,  if  adverse 
pressure  did  not  increase  resistance,  the  race  would  have 
already  many  times  become  extinct  by  accidental  adversi- 
ties. But  adverse,  downward  pressure  does  not  exter- 
minate, still  less  elevate;  it  merely  depresses,  flattens  and 
hardens  the  race,  the  better  to  resist.  Well  is  It,  indeed, 
for  the  twentieth-century  worshipers  of  Art  and  Refine- 
ment that  this  process  has  ever  been  alert  and  active  to 
a  fair  degree;  else  the  earth  would  now  be  circling  through 
the  seasons,  even  had  the  human  race  the  proverbial  nine 
lives,  without  Its  present  load  of  Philistines,  or  of  any 
one  else.     Overculture  begets  neither  happiness  nor  chll- 


420  THE    COST    OF    COMPETITION 

dren.  But  Superadverslty  begets  children  beyond  normal 
need,  that  a  surplus  may  be  available  for  sacrifice. 

The  light  of  this  dual  law  will  be  turned  upon  the  two 
most  vital  crimes  of  life :  prostitution  and  murder. 

Prostitution.  Of  all  crimes,  prostitution  comes  first  in 
importance.  The  factors  entering  into  its  prevalence  are 
three  in  number : 

( 1 )  The  greater  activity  of  reproductive  instinct  in  the 
depressed  classes; 

(2)  The  presence  of  economic  competition,  of  the  star- 
vation-wage and  of  enforced  Idleness  among  women; 

(3)  The  presence  of  unearned  surplus  cash  in  the 
hands  of  the  underworked  men  of  the  upper  economic 
classes. 

All  of  these  forces  are  emphasized  and  aided  by  the 
general  conditions  of  life  economically  resultant  from 
competition,  viz. :  congested  cities,  factories  operated  at 
minimum  cost,  and  slums.  Other  general  physiological 
conditions,  such  as  malnutrition,  etc.,  resultant  from  the 
same  origin,  do  the  same.  But  these  latter  forces  are  not 
the  initiative  ones;  they  merely  constitute  a  favorable 
environment.  Their  amelioration  by  other  methods  than 
the  abolition  of  competition  may  slightly  mitigate  the 
result,  but  It  can  do  no  more. 

( I )  The  greater  natural  activity  of  reproductive 
Instinct  in  the  lower  classes  Is  aided  by  the  unnaturally 
close  and  miscellaneous  mixing  of  the  sexes  in  Industrial 
and  home  life.  This  usually  Ignites  the  initial  spark. 
The  lack  of  attractive  homes  where  the  daughters  of  the 
family  may  receive  young  men,  under  the  protection  of 
proper  surroundings,  fans  It  Into  flame.  The  result  is 
the  creation  of  a  current  supply  of  girls  whose  hold  upon 
better  life  has  been  weakened  in  the  most  natural  and 
least  blameworthy  way:  by  seduction  by  a  lover.     The 


THE    COST   TO   THE    COMMUNITY         421 

couple  may  easily  have  been  impetuous,  rather  than 
unprincipled. 

Much  is  contributed  to  the  danger  by  the  economic 
obstacles  to  marriage,  by  that  delay  which  seems  only 
wise  (though  it  is  not)  when  both  parties  already  receive 
only  the  starvation-wage  when  single.  It  is  this  delay 
which  the  superciliousness  of  the  more  fortunate  urges 
as  a  plain  duty. 

It  suffices  to  say  that  competition  and  the  starvation- 
wage  together  offer  every  possible  inducement  against 
marriage.  As  holy  matrimony  is  our  highest  and  hap- 
piest gift  from  Heaven,  so  is  it  only  natural  that  its 
assault  by  foolish  human  artific-e  should  be  paid  for  with 
the  highest  price  we  have  to  give :  the  loss  of  true  marriage 
and  the  substitution  for  it  of  animal  intercourse. 

(2)  The  presence  of  enforced  idleness  among  women, 
as  among  men,  is  the  one  greatest  factor  of  all  in  the 
creation  of  prostitutes.  When  Mr.  Parkhurst  first 
exploded  his  invective  against  prostitution  in  New  York 
City,  Mr.  Bellamy  remarked,  in  his  "  New  Nation,"  that 
whatever  else  Mr.  Parkhurst  might  accomplish  by  success 
in  his  efforts,  one  thing  which  he  was  sure  to  do  was  to 
exterminate  by  starvation  some  thousands  of  women. 
There  has  never  been  said  a  more  cogent  word  regarding 
the  situation. 

Into  the  enforcedly  idle  class  drop  those  least  adapted 
to  maintain  themselves  and  their  self-respect.  Remember, 
always,  that  someone  must  drop  there.  A  certain  pro- 
portion of  society  is  inevitably  squ-eezed  there  by  the 
bargaining  in  the  upper  classes.  So  it  is  natural  that, 
among  the  rest,  come  the  unfortunates  of  paragraph  i. 
The  dishonored  girl  will  not  return  to  her  family.  She 
is  usually  not  allowed  to,  even  if  willing.  She  can  seldom 
find  empoyment  in  the  more  creditable  places,  even  were 


422  THE    COST    OF    COMPETITION 

she  otherwise  fit  for  It.  Begging  Is  forbidden  by  law. 
So  she  must  either  starve  or  sell  herself. 

See  how  she  does  it!  Walk  the  streets  of  the  larger 
cities  at  night.  Enter  some  of  the  houses.  Read  the 
fearful  revelations  of  New  York's  "  Committee  of 
Fifteen  "!  ^  Twenty-five  cents  a  check  she  earns  (If  the 
barterers  In  prostitution  do  not  take  even  that  away  from 
her) ,  and  eighteen  checks  a  night !  ^  Usually  averaging, 
however,  not  so  "  well  "  as  that !  Read  about  the  cadet- 
system  :  how  young  men  In  similar  lack  of  employment, 
or  finding  the  standard  wage  of  the  machine-shop  less 
attractive  than  that  to  be  won  by  traffic  in  prostitution, 
develop  and  exploit  this  traffic  most  thriftily.  How,  If 
supplies  of  fallen  girls  grow  slack,  they  themselves  seduce 
them;  then,  home  being  closed  to  them,  the  young  men 
will  supply  a  "home":  food  and  shelter,  such  as  It  Is; 
a  wrapper  and  slippers  to  wear,  so  that  the  streets  can- 
not be  traversed  for  escape,  were  there  any  place  to 
escape  to;  also,  the  brass  checks  and  the  privilege  of  cash- 
ing them  (at  his  own  price)  after  board  is  paid.  Each 
girl  brings  him  forty  dollars  a  week  and  upwards.  Society 
offers  to  him  no  equal  or  parallel  Inducement  to  be  honest, 
nor  to  her  either. 

Such  is  the  starvation-wage  among  the  prostitutes.  For 
the  iron  law  of  horizontal  competition  differentiates  them 
as  impartially  as  It  does  wage-earners  in  any  other  line. 
Skilled  effort  In  prostitution  prevails  to  success,  wins 
really  an  attractive  mess  of  pottage  for  its  soul.  Average 
ability  does  less.  If  you  doubt  the  presence  also  of  the 
unemployed  among  the  prostitutes,  hopelessly  below 
the  level  of  all  the  rest,  a  tour  of  the  Tenderloin  and  the 
missions  any  night,  winter  or  summer,  will  reassure  you. 

3  "The  Social  Evil."    New  York:  G.  P.  Putnam's  Sons,  1902. 
4"  A   Fight   for  the    Cit}\"    By   Alfred   Hodder.      The   Outlook,   Janu- 
ary 31,  1903,  page  259. 


THE    COST   TO   THE    COMMUNITY         423 

Such  is  the  legitimate  and  rational  fruit  of  the  combina- 
tion of  free  barter  and  the  free  social  contract:  freedom 
to  coerce.  Truly,  the  expansive  power  of  life  is  shown 
never  so  clearly  as  here.  That  life  will  enter  and  persist 
wherever  life,  of  whatever  sort,  is  possible,  we  know;  but 
it  is  hardly  credible  that  such  life  is  possible.  It  is,  never- 
theless. It  is  the  only  one  possible  to  permanently  unem- 
ployed women. 

What  problem  is  there  here  of  psychic  forces?  Is  this 
the  field  of  admiration  grown  too  rapturous,  of  hearts 
that  love  not  wisely  but  too  well?  Is  there  any  question 
of  psychology  here,  any  balance  of  will  against  sexual 
temptation?  Not  one  whit.  The  temptation  to  the  man 
comes  from  his  surplus  money  and  his  idleness,  not  from 
the  woman.  That  for  the  woman  comes  from  her  hunger 
and  her  weariness.  Her  very  destitution  and  depression, 
according  to  all  physiological  psychology,  should  par- 
alyze her  every  atom  of  natural  passion.  It  is  because, 
and  solely  because,  her  need  is  for  cash,  because  a  cash 
price  is  set  upon  everything  she  needs,  chiefly  of  all  upon 
the  right  to  work,  that  the  sole  temptation  which  the  man 
has  to  offer,  dead,  asexual  cash,  appeals  to  her  in  her 
weakest  spot,  her  sexless  hunger  of  stomach,  her  inward 
chill,  her  pride  of  appearance,  and  converts  her  most 
natural  craving  for  good  food,  the  first  essential  to 
regained  strength,  into  a  pitfall  for  her  further  destruc- 
tion. The  unnatural  way  in  which  the  system  of  competi- 
tive barter  artificially  perverts  the  most  natural  and  whole- 
some forces  of  human  life  into  destructive,  demoralizing 
and  tormenting  ones  is,  I  repeat,  fiendish  in  the  ingenuity 
and  baffling  complexity  of  its  cruelty,  and  it  is  no  where 
so  well  exemplified  as  in  its  pressure  upon  the  prostitute. 

Oh,  ye  proud  Captains  of  Industry,  organizers  of 
armies  of  working  men  and  women   (with  a  main  eye  to 


424  THE    COST    OF    COMPETITION 

a  lion's  share  of  what  they  produce)  ;  ye  promoters  and 
financiers,  fighting  over  the  spoils  squeezed  out  of  the 
lean  millions;  oh,  all  ye  good  and  commonplace  people, 
unable  to  be  captains  of  industry  but  wishing  that  ye 
might  be,  admiring  their  gold-lace  and  trappings,  covet- 
ing their  privileges,  upholding  the  whole  organization 
and  its  objects  as  the  only  good  and  possible  ones: — will 
ye  not  even  stop  and  ask  why  it  all  is?  Cannot  ye  see 
that  when  once  a  price  is  placed  upon  labor  and  upon  the 
chance  to  labor,  when  all  prices  are  made  the  toy  of  bar- 
ter and  intrigue,  when  once  the  sacred  day's-work  is  pros- 
tituted to  the  level  of  the  dollar,  that  with  it  to  the  auc- 
tion-desk goes  everything  that  a  day  covers  on  God's  foot- 
stool here  below, — not  only  life  itself,  but  those  things 
which  are  better  than  life:  manly  honor  and  womanly 
modesty,  domestic  love  and  the  hearthstone  on  which  the 
state  is  founded? 

Yet  what  are  the  remedies  suggested  for  all  this  mess 
by  the  Committee  of  Fifteen  (noble  souls!  striving 
seriously  enough  to  clean  the  national  cesspool),  or  by 
anyone  else?  Read  all  of  the  books  upon  prostitution. 
Of  what  do  they  prate?  License  or  prohibition,  medical 
inspection,  mission-work  or  moral  suasion !  How  much 
recognition  is  there  here  of  cause  and  effect,  of  prevention 
being  easier  and  cheaper  than  modification,  of  asepsis 
being  better  than  even  cured  disease?  How  commen- 
surate are  they  with  the  magnitude  and  forcefulness  of 
the  evil?  Their  best  possible  hope  is  to  stupefy  or  con- 
ceal, or  to  cajole  the  devil  into  departing,  with  a  loud 
noise,  like  an  Indian  medicine-man :  brown-sugar  pills  for 
cancer  of  the  stomach,  morphine  and  Christian  Science  to 
alleviate  starvation !  Is  this  Anglo-Saxon  directness, 
courage  and  efficiency?  Are  you  afraid  to  condemn  and 
attack  barter  as  the  cause  of  it  all, — universal  enough. 


THE   COST   TO   THE   COMMUNITY         425 

energetic  enough,  insidious  enough  and  evil  enough,  alone 
of  all  other  institutions,  to  explain  the  trouble, — just 
because  It  is  time-honored  by  the  older  world,  and 
defended  by  the  Ancient  and  Honourable  Pop-gun 
Company? 

So  goes  the  bedizened  woman,  so  often  not  even  bediz- 
ened: draggled  and  unkempt  and  blear-eyed  rather,  with 
raucous  voice,  radiating  silliness  and  vacuity  with  each 
blaspheming  word.  How  about  the  gilded  youth  who 
goes  with  her? 

(3)  To  the  mass  of  enforcedly  Idle  women  crowded 
into  too  miscellaneous  contact  with  mankind  in  the  modern 
city  comes  the  surplus  cash  of  the  winners  as  oil  Into 
air  heated  by  compression.  The  temperature  already 
acquired  Is  tremendously  augmented.  To  the  current  of 
womanhood  flowing  downward  into  the  depths  because 
the  higher  levels  are  untenable  is  added  another,  though 
a  smaller  one,  moved  in  the  same  direction  by  the  super- 
ficial gilding  of  the  lower  levels  by  the  cash-fattened 
youth.  If  starving  womankind  might  merely  feed  and 
clothe  Itself  by  sale  of  soul,  the  result  were  bad  enough. 
But  when  she  can  add  to  this  the  luxury  and  dissipation. 
In  mimicry  often  not  too  grotesque  or  far-fetched  of  the 
lives  led  and  vaunted  by  the  successful  woman  as  the  best 
of  life,  it  Is  far  worse.  It  is  what  we  see  all  about  us: 
harlots  In  the  highest  places  in  the  economic  scale.  That 
there  should  be  so  much  mere  dissipation  of  wealth  by 
competition  as  there  Is,  Is  a  national  calamity.  But  that 
so  much  of  this  wasted  wealth  should  go  to  purchase 
blasting-powder  with  which  to  undermine  that  founda- 
tion of  the  state:  the  family  and  the  home.  Is  a  worse  one. 
It  is  the  highest  possible  indictment  against  the  competi- 
tive system  which  It  is  possible  to  bring. 


426  THE    COST    OF    COMPETITION 

Murder. — Of  the  cause  of  the  other  of  the  two  capital 
crimes  taken  as  illustrative:  murder,  with  its  twin- 
brother,  suicide,  much  that  has  already  been  said  applies 
equally. 

Murder  is  associated  almost  always  with  one  or  the 
other  of  two  passions:  avarice  or  jealousy.  Jealousy 
finds  its  origin  in  much  the  same  forces  as  does  prostitu- 
tion :  the  exaggeration  of  sexual  instinct,  the  lack  of 
opportunity  for  deliberate  acquaintance  and  courtship 
under  proper  conditions,  the  obstacles  to  prompt  marriage 
and  the  general  lack  of  home-atmosphere  in  the  barracks 
called  tenements  and  apartments  in  modern  city-life. 

The  avarice  just  mentioned  is  more  often  the  real  and 
desperate  need  of  the  lower  classes  than  it  is  properly 
what  the  word  signifies.  True  avarice  will  make  a  miser 
of  a  man,  but  not  a  murderer.  After  all  that  has  been 
said  of  the  pressure  upon  men  for  work  and  for  proper 
return  from  their  work  due  to  competition,  little  need  be 
added  here  to  show  its  direct  connection  with  assault  and 
murder.  With  the  starvation-wage  class  there  is  tempta- 
tion enough;  with  the  submerged  tenth  the  wonder  only 
is  that  there  is  not  complete  revolt  and  anarchy,  instead 
of  merely  occasional  assassination.  It  is  astounding  how 
many  there  are  who  are  content  to  sink  into  the  hospitals, 
asylums  and  poor-houses  unavenged. 

Both  of  these  forces  are  emphasized  and  given  direc- 
tion by  the  aggressive  brutality  which  has  been  pointed 
out  as  an  inevitable  result  of  the  repression  of  life.  In 
addition  comes  the  influence  of  example.  Disguised  by 
solemn  pretense  as  it  may  be,  the  tribunal  of  competition 
is  force,  the  law  of  price-making  is  anarchy  (no-law). 
The  soul  of  commercialism  is  might;  its  operation  is 
economic  violence;  its  fruit  is  physical  hardship,  even  unto 
death.     High-priced  wheat  and  coal  and  ice  are  its  off- 


THE    COST   TO   THE    COMMUNITY  427 

spring  and  increased  death-rates  its  natural  progeny.  The 
lower  classes  feel  this,  in  their  bones,  more  keenly  and" 
accurately  than  the  upper  classes  can  read  it  from  books. 
They  are  on  the  firing-line;  and  on  the  firing-line  one  is 
not  always  careful,  after  generations,  as  to  one's  aim:  let 
only  it  be  assured  that  ball-cartridges  are  used  and  that 
someone  besides  self  gets  hurt. 

Let  him  who  doubts  all  this  but  read  the  daily  papers. 
Take  assault  after  assault,  check  off  the  murders,  count  up 
the  suicides,  if  you  can.  See  how  few  of  them  fail  to 
reveal  the  direct  result  of  competition :  either  a  job  lost 
or  one  never  found;  unfortunate  or  too  fortunate  specula- 
tion ;  securities  turned  to  worthless  paper,  or  none  to  turn 
worthless;  or  just  plain,  hungry  robbery. 

There  is  no  need  for  more  mysterious  explanation  of 
these  simple,  bold  phenomena.  We  have  too  long  sought 
to  entangle  our  minds  and  consciences  in  an  intricacy  of 
psychological  reactions  which  we  can  neither  define,  fol- 
low nor  understand.  We  have  too  much  faith  in  the  per- 
sistence of  the  "  criminal  type,"  as  a  distinct  variety  of  the 
species  homo  which  survives  all  attempt  at  outbreeding. 
There  is  no  ''  criminal  type,"  as  a  separate  race  of  men. 
Man  undergoes  natural  metamorphosis,  under  pressure  of 
environment,  more  readily  than  does  any  other  form  of 
life.  As  vegetable  cells  become  specialized,  under  outside 
pressure,  into  the  most  varied  duties,  and  different  members 
of  the  plant  become  leaves,  rootlets,  petals,  stamens,  etc., 
upon  demand,  for  the  good  of  the  entire  mass,  so  does 
divine  human  nature,  equally  elastic,  intelligent  and  sub- 
servient, turn  millionaire  or  murderer,  statesman  or  walk- 
ing-delegate, at  the  behest  of  the  community  and  its  insti- 
tutions, with  no  fundamental  abandonment  of  its  original 
characteristics.  And  some  day  we  shall  see,  much  more 
plainly  than  is  possible  in  the  midst  of  the  present  confu- 


428  THE    COST   OF    COMPETITION 

sion,  that  each  of  these,  its  most  diverse  specializations  of 
the  race,  is  laboring  equally,  under  divine  guidance,  one  by 
propulsion  and  another  by  protest,  the  one  as  driver 
and  the  other  as  brake,  the  one  as  rail  and  the  other 
as  wheel,  for  the  guidance  of  the  grinding  growth  of  human 
institutions  into  the  path  of  that  ultimate  perfection  and 
power  which  is  not  to  be  reached  by  any  more  royal  road. 

Read  what  Professor  Edward  A.  Spitzka,  of  Columbia 
University,  has  to  say  of  the  "  criminal  type."  In  an 
address  ^  delivered  at  the  opening  of  the  present  year  he 
declared  that  "  after  a  thorough  study  and  investigation 
of  several  years  he  had  concluded  that  crime  could  not  be 
attributed  to  any  deficiency  of  the  brain.  The  study  of 
criminals  does  not  necessarily  tend  to  establish  a  criminal 
type  or  anything  else  maintained  by  the  Lombroso  school, 

"  Many  criminals  show  not  a  single  anomaly  in  their 
physical  or  mental  makeup,  while  many  persons  with 
marked  evidences  of  morphological  aberration  have  never 
exhibited  the  criminal  tendency.  Every  attempt  to  prove 
crime  to  be  due  to  a  constitution  peculiar  only  to  criminals 
has  failed  finally.  It  is  because  most  criminals  are  drawn 
into  the  ranks  of  the  low,  the  degraded,  the  outcast  that 
investigators  were  ever  deceived  into  attempting  to  set  up 
a  type  of  criminals.  The  social  conditions  which  foster 
the  great  majority  of  crimes  are  more  needful  of  study  and 
improvement;  by  this  means  only  will  crime  become  less 
prevalent  throughout  the  world." 

Corruption 

These  considerations  bring  one  directly  into  the  topic 
of  crime  of  a  purely  mercenary  order,  untainted  by  physical 
violence.     In  this  class  of  overtemptation,  when  closely 

5  Quoted  in   the   language  of   The  Search-Light  for  January  7,    1905. 


THE    COST   TO    THE    COMMUNITY         429 

examined,  there  fails  to  appear  any  natural  basis  for  the 
artificial  distinction  between  men  employed  in  public  or 
in  private  service.  There  appears  to  be  as  much  defal- 
cation in  private  as  in  public.  In  the  latter  it  is  the  prime 
duty  of  the  authorities  in  power  to  spread  all  the  evidence 
before  the  public,  which  is  both  nominally  and  actually  the 
employer.  In  the  former  it  is  the  prime  duty  of  the 
powers  to  keep  the  matter  quiet  and  out  of  the  courts,  if 
possible;  for  the  public  is  not  nominally,  though  really,  the 
employer.  So  we  hear  less  of  it.  In  regard  to  mercen- 
ary crime  against  the  community  other  than  mere  defalca- 
tion the  following  contrast  throws  the  highest  light. 

The  making  of  private  profit  while  in  public  service  is 
nominally  a  gross  crime.  In  commercialism  the  making 
of  private  profit  in  public  service  is  the  sole  object  of  organ- 
ization.    Success  at  it  is  lauded,  not  blamed. 

A  business  which  supplies  to  the  people  a  wide  need, 
a  need  which  the  Individual  citizen  cannot  efficiently  supply 
himself,  performs  a  public,  not  a  private,  service.  The 
fact  that  it  is  called  a  private  business  does  not  by  one  whit 
alter  the  true  situation.  Nor  does  the  fact  that  a  citizen 
possesses  a  degree  of  choice  between  more  than  one  depart- 
ment of  that  service,  each  called,  for  profit's  sake,  a  com- 
peting private  business  and  all  more  or  less  in  collusion 
with  one  another,  alter  the  situation  In  essential.  There 
has  been  no  illegal  corruption  In  public  office  yet  revealed 
which  equals  in  enormity  the  continuous,  legal  robbery  of 
the  people  by  the  corporations  organized  for  that  purpose 
under  the  guise  of  doing  something  else, — the  supplying 
of  oil,  meat,  transportation,  etc.  For  the  corporation 
does  not  perform  the  service.  A  $5000-superintendent 
takes  complete  care  of  that.  The  corporation  busies  itself 
solely  with  seeing  that  the  dividends  come  in.  When  it 
becomes  possible  to  Increase  the  dividends  by  means  of  a 


430  THE    COST    OF    COMPETITION 

diminution,  or  even  a  complete  cessation,  of  service,  as  has 
frequently  been  the  case,  it  shows  not  the  slighest  reluc- 
tance to  the  adoption  of  that  policy.  The  object  of  incor- 
poration is  the  making  of  profit,  not  the  performance  of 
service.  In  every  case,  the  dividends  are  the  prime  object, 
the  service  a  secondary  and  a  purely  incidental  necessity. 

The  public  departments  in  which  the  greatest  scandals 
have  developed  are  still  able  to  perform  their  services  at  a 
much  lower  total  cost  to  the  public  than  are  the  private 
corporations,  with  their  enormous  "  cost  of  doing  busi- 
ness"; for  if  you  charge  against  the  post-office  its  occa- 
sional deficit  (averaging  zero)  you  must  also  consider  the 
egregious  charges  sent  against  the  taxpayer  by  the  great 
corporations:  the  tariff,  the  militia  and  the  civil  law.  In 
public  office  defalcation  of  the  people's  money  is  Incidental; 
in  private  office  it  is  fundamental.  In  public  office  it  is 
carried  on  with  mediocre  ability;  in  private  office  it  absorbs 
the  talent  of  the  ablest  in  the  land.^ 

Indeed  it  might  be  expected,  a  priori,  that  an  institution 
so  fundamentally  diffused  throughout  and  absorbed  by  the 
people  as  that  of  commercial  competition  should  pay  no 
attention  to  boundaries  so  artificial  as  the  distinctions 
between  the  so-called  public  and  private  services.  Both 
classes  of  service  supply  to  the  people  absolute  needs. 
Both  organize  and  employ  therefor  the  strength  of  many 
workers.  Both  need  capital  for  their  prosecution.  Both 
draw  all  of  their  support  from  the  pockets  of  the  people. 
Distinction  between  the  two  based  upon  characteristic  dif- 
ferences in  the  thing  supplied  it  is  impossible  to  descry. 
The  very  wide  difference  between  the  two  as  to  the  manner 
of  their  conduct  it  is  our  present  business  to  make  clear. 

The   wonder   is,    therefore,    that  until    fairly   recently 

C  For   a  wide   discussion   of  this   relationship   between   public   costs   and 
public  ethics,  see  page  533,  and  following. 


THE    COST   TO   THE    COMMUNITY         431 

profit-seeking  has  kept  itself  comparatively  clear  of  the 
public  services  which  are  called  by  that  name,  and  has  con- 
fined itself  to  those  still  masquerading  under  the  name  of 
private  business.  But  at  no  previous  time  in  the  world's 
history  and  in  no  other  land  has  man  been  so  free  to 
indulge  in  competitive  effort  as  in  America  to-day.  There 
is  no  other  land  in  which  the  phenomena  which  are  here 
being  pointed  out  as  peculiarly  the  result  of  commercial 
competition  are  so  common  or  so  well  developed.  There- 
fore it  is  in  America  that  the  pressure  visible  in  lack  of 
other  employment  and  in  the  rapid  congestion  of  all  other 
fields  of  profit-seeking,  have  besieged  the  public  ofHces  for 
admission  into  that  field  of  opportunity  for  profit-making, 
far  too  closely  for  successful  resistance.     Given : 

(i)  A  current  supply  of  men,  capable  men,  in  want  of 
work  or  of  more  remunerative  work: 

(2)  A  field  of  effort,  viz.:  public  oflfice,  so  closely  in 
contact  with  and  dependent  upon  profit-making  cor- 
porations for  its  daily  effectiveness  that  it  is  fecund 
with  opportunities  for  private  profit;  and 

(3)  The  universal  example,  in  every  other  department 
of  industry  and  commerce,  of  profit-seeking  at  the 
expense  of  the  community  applauded  and  rewarded 
by  the  humbugged  public;  and 

(4)  That  frailty  of  human  nature  to  which  the  opti- 
mistic reformer  is  so  often  referred  for  enlighten- 
ment as  to  the  futility  of  his  hopes; 

Given  these  things,  and  how  long  could  public  oflice  pos- 
sibly be  expected  to  remain  clean?  Its  development  into 
a  maximum  productivity  of  private  profit  is  as  natural  as 
the  development  of  a  virgin  mine-property  into  the  same 
civilized  condition.  Patriotism  and  public  spirit,  outraged 
at  every  turn  by  profit-seeking  under  any  name,  may  stand 
aghast;  they  can  accomplish  nothing  reformatory  by  strain- 


432  THE   COST    OF   COMPETITION 

ing  at  the  gnat  in  the  post-office  scandals  while  it  calmly 
swallows  the  enormous  camel  visible  in  the  profits  of  the 
trusts  and  the  transportation-companies.  The  public 
cheerfully  pays  incomes  ranging  upwards  to  millions  to 
individuals  concerned  in  the  public  supply  of  steel,  coal, 
oil  and  transportation;  the  same  to  those  merely  owning 
building-sites,  performing  no  service  whatever.  To  the 
chief  executive  of  the  entire  nation  it  pays  $50,000,  and 
expects  him  to  reexpend  that  during  his  term  of  office. 
Would  it  be  so  unnatural  if  he  should  feel  that  his  services 
were  of  equal  worth  and  importance  to  the  nation  with 
those  of  Mr.  Rockefeller  or  Mr.  Carnegie,  for  instance, 
and  that  he  should  retire,  after  each  administration,  with 
at  least  a  few  millions  made  out  of  his  incumbency  ?  What 
if  every  petty  official,  whether  federal,  state  or  city,  made 
out  of  his  office,  not  only  what  he  does  make  in  the  corrupt 
cases,  but  ten  times  more?  These  offices  would  even  then 
not  cost  us  so  much  as  do  the  services  of  individuals  of 
similar  importance  in  private  business,  in  profit  made  and 
strength  lost  in  competition,  in  "  cost  of  doing  business." 
Suppose  that  we  paid  public  salaries  as  great  as  that,  should 
we  not  then  at  least  have  an  efficiency  of  public  service  as 
great  as  that  in  private  business:  well-chosen,  well-disci- 
plined assistants,  not  allowed  to  steal;  or  at  any  rate,  no 
more  than  so  much, — as  is  now  the  case  in  all  great  busi- 
nesses and  in  Philadelphia's  "  most  perfect  "  machine? 

The  problem  is  of  such  importance  as  to  be  worth 
restating:  for  a  problem  rightly  stated  is  half  solved. 
Given : 

(i)  The  public  support  of  an  arrangement  which 
reduces  the  opportunity  for  employment  from  a 
natural  surplus  to  an  artificial  deficit,  so  that  the 
man  seeks  employment  instead  of  the  employment 
seeking  the  man; 


THE    COST   TO   THE    COMMUNITY         433 

(2)  Which  reduces  all  questions  of  choice  of  employ- 
ment, even  in  the  minds  of  the  leaders  of  men,  to 
one  of  comparative  pecuniary  reward,  and  which 
measures  not  only  success,  but  the  bare  right  to 
exist  by  the  individual's  willingness  and  ability 
to  force  money  from  other  pockets  into  his  own; 

(3)  Which  allots  the  greatest  and  the  most  reliable 
pecuniary  rewards,  in  the  form  of  profits,  to  those 
engaged  in  barter  and  the  smallest  and  most  uncer- 
tain, in  the  form  of  visible  fixed  salaries  or  wages, 
to  those  engaged  in  production  of  value  to  the 
community; 

(4)  Which  presents  a  fertile  field  for  the  exaggeration 
of  those  private  profits  by  the  influence,  or  even  the 
absolute  control,  of  legislation  or  of  its  judicial 
interpretation; 

Given,  I  say,  these  fixed  premises,  rigidly  enforced  by  a 
democratic  people  in  its  popular  support  of  a  competitive 
system  of  wealth-distribution,  and  no  other  logical  result 
can  possibly  be  deduced  than  the  wide  prevalence  of  profit- 
seeking  and  profit-making  in  public  service,  upon  an  enor- 
mous, typically  American  scale. 

To  him  who  cares  nothing  for  empty  formulas,  but  deals 
with  natural  realities,  public  service  is  a  public  service,  no 
matter  what  its  name.  The  making  of  private  profit  in 
the  alleged  protection  of  the  community  from  cold  or 
hunger  can  never  be  argued  by  the  theorists  into  anything 
different  in  principle  from  the  making  of  private  profit 
in  the  alleged  protection  of  the  community  from  vice  and 
crime.  The  underlying  principle  is  exactly  the  same. 
The  results  are  the  same :  the  protection  in  the  two  cases 
equally  fails  to  be  an  eflScient  protection  so  soon  as  the 
element  of  private  profit  enters.  The  heads  of  the  two 
services   and  their  underlings   are   equally   exposed   to   a 


434  THE    COST    OF    COMPETITION 

temptation  too  strong  for  human  nature  to  withstand. 
The  community  is  equally  corrupted  by  the  spectacled 

The  efficiency  of  service  is  equally  ruined:  our  supplies 
of  coal  and  transportation  are  as  far  from  being  what 
they  ought  to  and  might  be  as  are  our  supplies  of  muni- 
cipal administration  and  police  protection.  The  reasons 
therefor  are  the  same  and  are  mutually  reactive.  If  the 
community  reward  Rockefeller  with  millions  for  follow- 
ing his  methods  of  public  exploitation,  how  can  it  blame 
Machen  for  seeking  thousands  by  the  same  methods? 
How,  in  the  name  of  common  sense,  can  It  be  puzzled 
by  the  fact  that  Machen  does  follow  them? 

These  are  the  well-springs  of  public  corruption.  We 
may  disbelieve  and  delay  and  squirm  out  of  the  failure  of 
one  compromise,  only  to  wriggle  into  the  trap  of  another, 
as  we  will.  The  springs  cannot  be  sealed  from  the  out- 
side.    They  will  continue  to  flow, — or  worse,  to  make  a 

^  Mr.  W.  A.  White,  writing  in  the  September  (1904)  issue  of 
McClure's  Magazine,  of  the  postal  frauds,  says:  "Of  the  thirty-four 
thousand  office-holders  in  the  town  [Washington]  not  five  hundred  look 
upon  their  offices  as  sacred  trusts  to  the  people.  Anything  which  the  mass 
of  those  Washington  office-holders  can  get  out  of  the  government  is  re- 
garded by  public  opinion  among  them  as  clear  gain,  whether  it  be  an 
hour's  time  or  a  railroad-pass  for  betraying  the  government's  interest  in 
matters  under  their  care.  The  man  who  is  making  'easy  money'  off 
the  government  ...  is  looked  up  to  with  a  kind  of  envious  respect." 
Is  not  this  exactly  the  ethics  of  the  outside  commercial  world,  only  slightly 
purer?  Out  of  any  thirty-four  thousand  business-men  are  there  so  many 
as  five  hundred,  or  even  five,  who  look  upon  their  service  to  the  community 
as  a  public  trust.  And  yet  what  else  can  you  make  of  it  than  a  public 
trust?  Are  not  the  ethics  of  corruption  exactly  those  of  lynching,  and 
the  cure  the  same:  that  the  community  cannot  expect  the  common 
herd  to  respect  a  written  or  an  unwritten  law  which  public  opinion  does 
not  equally  impose  upon  the  masters.  The  negroes  will  not  cease  breaking 
the  law  until  the  whites  do  the  same.  The  governmental  officials  cannot 
be  expected  to  refrain  from  making  all  Hiey  can  out  of  the  government, 
which  is  the  people,  until  the  captains  and  privates  of  commerce  are 
rebuked  for  making  all  they  can  out  of  the  people,  which  is  the  govern- 
ment. 


THE    COST   TO   THE    COMMUNITY  435 

soggy  marsh  of  our  fair  land, — until  we  go  to  the  bot- 
tom of  the  matter.  When  the  sale  of  a  thing  at  more 
than  its  cost  of  production  is  regarded  as  public  treason, 
and  is  prevented  by  the  sale  of  all  things  at  cost  by  salaried 
public  servants,  then,  and  not  before,  will  corruption  dis- 
appear  from   public  office. 

Is  it  any  wonder  that  the  populace  is  supine  in  the  face 
of  corruption,  that  St.  Louis  is  not  ashamed  of  her  politi- 
cal machine  and  that  Philadelphia  was  proud  of  hers? 
Does  it  see  aught  going  on  in  the  offices  of  City  Hall  that 
it  does  not  see  in  any  business-office:  inflation,  under- 
bidding, subletting,  doctoring  books,  stuffed  or  dummy 
directorates,  paper  corporations,  purchase  or  sale  of  in- 
fluence, etc.,  etc.?  Mr.  Steffins,  in  the  St.  Louis  number 
of  his  splendid  series  of  revelations  of  municipal  corrup- 
tion, says:  "The  convicted  boodlers  have  described  the 
system  to  me.  There  was  no  politics  in  it, — only 
business." 

The  suggestion  that  salaried  public  officials  would  be 
more  efficient,  for  any  public  service,  than  the  present 
private  ones  Invariably  raises  the  cry:  "Think  how 
politics  and  corruption  would  enter!  "  There  Is  now  in 
it  much  business  and  little  politics.  There  would  then  be 
more  politics,  perhaps,  but  surely  less  business:  an  infinite 
gain  to  the  better! 

Such  are  the  real  causes  of  corruption  in  public  office: 
the  naturally  close  affiliation  between  the  public  services 
which  are  called  public  and  those  arbitrarily  called 
private,  the  natural  similarity  of  profit-making  in  either, 
and  the  consequent  natural  inability  on  the  part  of  the 
people  to  curb  one  whil'  failing  to  curb  the  other.  Be- 
cause the  only  difference  between  the  two  is  the  artificial 
one  of  name,   because   all  the  material  penalties   which 


436  THE   COST   OF   COMPETITION 

profit-seeking  precipitates  upon  the  community  are  greater 
In  the  case  of  private  than  of  public  office,  the  common 
people  will  always  fall  to  sense  any  broad  distinction. 
They  enter  a  prosperous  store,  a  lawyer's  office  or  a  bank 
to  transact  its  regular  business  In  exactly  the  same  mood 
In  which  they  enter  a  police-office  to  buy  license  for  vice : 
with  the  feeling  that  they  are  paying  an  exorbitant  price 
for  a  thing  which  they  do  not  want  but  which  they  are 
required  to  have  in  order  to  prosecute  their  daily  avoca- 
tion. The  Insignia  are  the  same:  mahogany  furniture, 
plate-glass,  enormous  ledgers  and  forbidding-looking 
safes;  the  results  are  the  same.  They  perceive,  much 
more  clearly  than  do  the  economists,  that  their  hard  earn- 
ings pay  for  it  all. 

When  a  street  is  repaved  it  furnishes  them  with  work. 
If  the  paving  were  unnecessary,  it  appears  to  them  only  the 
more  clearly  in  the  light  of  a  boon,  fallen  from  an  admin- 
istration exceptionally  capable  and  benevolent.  If  the 
cost  to  the  taxpayers  be  high  because  a  thousand  was  spent 
upon  the  city  council  in  securing  exemption  from  competi- 
tion, why  is  it  worse,  they  ask,  than  If  the  thousand  were 
spent  In  competition?  I  also  ask  "Why?"  Certainly 
true  is  this:  that  the  thousand  would  not  have  been  spent 
in  purchasing  exemption  from  competition  If  success  In 
competition  did  not  cost  much  more. 

But  the  connection  between  profit-seeking  and  corrup- 
tion In  public  office  Is  also  more  direct  than  merely  by 
public  example.  Corruption  is  merely  one  phase  of  com- 
petition. Nearly  all  businesses  need.  In  their  operation 
or  for  their  more  profitable  operation,  privileges,  permits, 
franchises,  licenses,  tariffs,  subsidies.,  etc.,  which  the 
government  alone  can  grant  and  which  it  is  legal  for  them 
to  have.  Illegal  favoritism  can  also  enhance  profits: 
Immunity    from    taxation,    from    arrest    for    defying    the 


THE    COST   TO   THE    COMMUNITY         437 

burdensome  restriction  of  the  law,  monopoly  of  city  con- 
tracts, etc.  The  corruption  in  each  city,  different  from 
that  in  all  of  the  rest,  reveals  the  systematic  exploitation 
of  some  one  of  these  lines.  In  Minneapolis  it  was  free- 
dom from  arrest  for  profit-making  vice;  in  St.  Louis  the 
sale  of  special  privileges  for  profit-making;  in  Pittsburgh 
and  Philadelphia  the  farming  of  artificial  monopolies.  In 
no  case  is  the  corruption  confined  solely  to  these  single 
lines;  but  the  general  differences  between  the  cities  rest 
upon  business,  rather  than  upon  political,  distinctions. 

The  search  after  these  aids  in  profit-making  is  exactly 
parallel  with  the  search  after  any  other  such  aids:  a  wider 
market,  a  better  price,  a  cheaper  supply  of  raw  material 
or  labor.  The  cost  of  initiating  corruption,  in  legal 
counsel,  bribes,  bonuses,  etc.,  is  charged  to  the  same 
general  accounts  upon  the  ledger  as  is  the  cost  of  doing 
business :  the  employment  of  commercial  travelers  or  the 
fees  for  advertising-space.  In  the  mind  of  the  business- 
man it  is  morally  excused  by  the  same  necessity.  Of  all 
the  revelations  of  current  public  shame  made  popularly 
public  during  the  past  year,^ — most  notably  in  connection 
with  the  coal-strike,  in  Mr.  Kennan's  "  Holding  up  a 
State  "  and  Mr.  Hodder's  "  A  Fight  for  the  City,"  in 
The  Outlook,  and  in  the  articles  by  Miss  Tarbell  and  Mr. 
Stefiins  in  McClure's  Magazine, — the  greatest  shame  does 
not  by  any  means  fall  upon  the  public  oflicials;  it  is  upon 
the  business-men  who  bought  them.  Some  were  conscious 
of  their  guilt;  they  subscribed  freely  to  the  funds  of  the 
reform-associations,  but  they  would  not  permit  the  use  of 
their  names, — worth  far  more  than  their  dollars, — for 
fear    of    harming    their    business;    for    business    always 

8  1902-3.  Nothing  could  better  instance  this  same  identity  of  "business" 
with  the  corruption  of  legislation,  if  not  with  sheer  peculation,  than  the 
mutual  insurance  methods  revealed  since  these  lines  were  written. 


438  THE    COST    OF    COMPETITION 

antagonizes  patriotism.  Others  were  worse  in  fact, 
though  more  excusable  in  spirit.  They  regarded  the  pur- 
chase of  the  "  influence  "  of  public  officials  as  a  necessary 
and  legitimate  part  of  doing  business.^  There  is  plenty 
of  excuse  for  this,  in  fact,  if  not  in  principle.  Private 
competition  is  full  of  this  same  sort  of  effort:  the  intrigu- 
ing for  or  the  downright  purchase  of  private  influence,  the 
oftering  of  bribes,  the  forging  of  dummy  contracts,  "  cut- 
ting up  the  back,"  taking  business  nominally  at  one  figure 
and  actually  at  another,  combining  into  pools,  agreements, 
etc.,  forming  rings  within  and  about  rings,  each  undermin- 
ing the  other.  All  of  this  pictures  fairly  the  low  ethical 
standards  of  competitive  effort.  To  ask,  then,  the  man 
who  has  been  brought  up  amidst  and  educated  and  sup- 
ported by  such  work  throughout  his  entire  life  to  fail  to 
apply  it  to  its  most  lucrative  field:  public  corruption,  to 
ask  him  even  to  stand  broadly  and  effectively  for  its  eradi- 
cation, as  a  pestilential  thing,  from  our  community-life.  Is 
placing  a  strain  both  upon  his  understanding  and  his 
patriotism  to  which  human  nature  is  naturally  quite 
unequal. 

All  corruption  originates  in  one  of  two  places: 
(i)  In  the  profits  of  otherwise  legal  business; 
(2)    In  the  profits  of  hired  vice. 

9  One  incident  will  show  how  widespread  and  insidious  is  the  evil  of 
this  misconception.  At  one  of  the  discussion-suppers  of  the  Worcester 
Economic  Club,  including  in  its  membership  the  best  citizens  of  the  Heart 
of  the  Commonwealth,  a  representative  of  the  department  of  economics  of 
Harvard  University,  in  speaking  to  the  relation  between  private  business 
and  public  corruption,  said  solemnly:  "  Gentlemen,  if  I,  in  search  of  a 
legal  franchise,  had  made  every  honest  effort  to  secure  it,  had  paid  my 
way  honestly,  and  found  it  finally  blocked  by  a  public  official,  elected  by 
the  people,  who  insisted  upon  being  bought,  why,  I'd  buy  him!"  It  is  re- 
freshing to  add  that  the  only  case  that  evening  of  the  spontaneous  inter- 
ruption of  a  speaker  by  universal  applause  was  when  a  later  speaker 
rebuked  this  attitude  by  the  enunciation  of  the  principle  that  in  the  cor- 
ruption of  public  officials  the  guilt  of  the  tempter  was  far  greater  than  that 
of  the  tempted. 


THE    COST   TO   THE   COMMUNITY  439 

Of  the  two  the  former  Is  incomparably  the  greater.  Of 
Pittsburgh  Mr.  Steffins  says:  "The  railroads  began  the 
corruption  of  this  city."  Of  New  York  Mr.  Jerome 
says:  "  This  avowed  support  of  Tammany  by  the  Met- 
ropolitan Street  Railway  Company  comes  just  in  time  to 
show  the  blindest  who  the  friends  of  Tammany  really 
are.  The  grafter  never  yet  was  working  in  the  interest  of 
the  poor  and  honest  man;  he  is  certain  to  be  working  in  the 
•  interest  of  the  man  who  has  the  stuff."  And  the  "  stuff  " 
is  the  profits  made  out  of  the  people  by  private  corpora- 
tions in  public  services. 

Of  St.  Louis  Mr.  Steffins  says,  In  speaking  of  the  politi- 
cal boss,  Butler:  "  His  business  was  boodling, 
the  stock-in-trade  of  the  boodler  Is  the  rights,  privileges, 
franchises  and  real  property  of  the  city,  and  his  source  of 
corruption  is  the  top,  not  the  bottom,  of  society."  ^"^  "  The 
boodlers  told  me  that,  according  to  the  tradition  of  their 
combine,  there  '  always  was  boodling  In  St.  Louis.'  But- 
ler organized  and  systematized  and  developed  it  Into  a 
regular  financial  institution,  and  made  of  it  an  Integral  part 
of  the  business  of  the  community.  He  had  for  clients, 
regular  or  occasional,  bankers  and  promoters;  and  the 
statements  of  boodlers,  not  yet  on  record,  allege  that  every 
transportation  and  public  convenience  company  that 
touches  St.  Louis  had  dealings  with  Butler's  combine. 
And  my  best  information  Is  that  these  Interests  were  not 
victims.  Blackmail  came  in  time,  but  In  the  beginning 
they  originated  the  schemes  of  loot  and  started  Butler  on 
his  career. 

"  Robert  M.  Snyder,  a  capitalist  and  promoter,  of  New 
York  and  Kansas  City,  came  Into  St.  Louis  with  a  traction- 
proposition.  .  .  .  Snyder  paid  $250,000  for  the 
franchise,  and  as  Butler  and  his  backers  [the  street-railway 
Interests  already  installed]  had  paid  only  $175,000  to  beat 

10  The  italics  are  mine. 


440  THE    COST    OF    COMPETITION 

it,  the  franchise  was  passed.  Snyder  turned  around  and 
sold  it  to  his  old  opponents  for  $1,250,000.  It  was  worth 
twice  as  much." 

Is  there  here  any  doubt  as  to  the  origin  and  cause  of  the 
immorality?  Is  not  the  political  boss  most  plainly  a 
protege,  an  offspring,  of  the  relegation  of  public  services 
to  private  profit-making?  Is  it  not  unutterably  plain  at 
last  that  the  pitch  with  which  all  are  defiled  is  these  same 
profits,  that  without  their  artificial  attachment  to  the  service 
neither  the  bribing  corporation-oflicial,  of  principal  guilt, 
nor  the  bribed  government-official,  of  secondary  guilt, 
would  touch  the  business?  It  is  said  so  often  and  so  easily 
that  to  hand  over  a  public  service  to  the  public  servants 
would  be  to  pile  up  corruption.  If  it  were  done  even 
upon  the  public  understanding  that  they  were  not  to  con- 
duct it  at  cost,  as  honest  public  servants,  responsible  to  the 
people,  but  that  they  were  to  make  out  of  it  all  they  possi- 
bly could, — the  policy  plainly  allotted  to  the  private  cor- 
porations,— the  service  would  not  cost  what  it  does  now; 
for  now  the  profits  must  not  only  feed  just  these  same 
political  people,  but  all  the  corporation-officials  and  stock- 
holders in  addition,  a  double  set  of  leeches;  and  the  second 
set  not  in  any  effective  way  limited  by  public  opinion  as  to 
the  amount  of  their  blood-suction,  but  rather  praised  and 
run  after  for  their  excesses,  for  their  very  visible  blood- 
distended  corpulence  and  opulence. 

But  if  the  service  were  handed  over  to  the  public 
servants  upon  the  public  understanding  that  it  is  to  be  con- 
ducted at  cost,  at  the  worst  there  would  be  but  one  set  of 
leeches  to  feed  and  watch;  and  except  by  pure  embezzle- 
ment they  could  get  nothing.  If  the  accounts  were  public, 
and  only  in  public  services  organized  as  such  is  compulsory 
publicity  practicable,  it  would  soon  be  visible  if  the  service 
were  conducted  at  more  than  cost.     In  the  post-office,  with 


THE   COST   TO   THE    COMMUNITY         441 

all  its  frauds,  the  amount  of  money  lost  before  the  pecula- 
tion is  discovered  is  insignificant.^^  And  if  the  service  be 
conducted  at  cost  the  fodder  for  the  political  bosses  is 
wanting.  If  the  workingmen  of  his  ward  all  have  jobs 
seeking  them,  enforced  idleness  and  starvation-wages  being 
no  more,  his  tools  are  all  dulled.  Is  it  not  plain  that  no 
one  wishes  to  touch  a  cost-operated  service  except  the  man 
seeking  to  exchange  an  honest  day's  work  for  an  honest 
day's  pay?  Neither  the  brazen  captains  of  industry  nor 
their  hired  assassins  of  public  morals  will  have  any  of  it. 
Nor  can  the  unscrupulous  gain  anything  by  injecting 
into  a  public  service  which  is  conducted  nominally  at  cost  a 
concealed  profit.  It  cannot  reach  their  pockets  if  tried. 
The  handling  of  the  funds  by  a  separate  organization  ac- 
complishes that  automatically.     The  same  precaution   is 

11  These  post-office  scandals,  instead  of  standing  as  evidence  against 
the  wisdom  of  public  ownership  or  operation,  illustrate  the  very  point 
which  we  wish  to  prove:  that  so  long  as  any  profit-seeking  corporations 
exist  no  public  service  can  possibly  be  perfectly  pure.  In  them,  as  in  all 
the  other  instances  cited,  the  source  of  the  temptation  to  corruption,  and 
the  opportunity  for  its  exercise,  is  the  legally  honest  profit-making  field 
outside  of  the  governmental  organization.  Therefore  the  writer  preaches 
not  at  all  that  all  governmental  enterprise  may  be  expected  to  be  pure, 
whether  its  territory  be  expanded  or  restricted ;  but  that  it  must  always 
be  expected  to  be  impure,  in  exact  proportion  to  the  amount  of  commer- 
cial, competitive  profit-seeking  which  is  abroad  in  the  land.  Therefore 
the  transfer  of  each  service  in  turn  from  private  to  public  hands  will  con- 
stitute a  real  gain  to  the  community  only  in  so  far  as  it  restricts  the  volume 
of  private  profit-seeking  outside  the  government.  In  order  to  accomplish 
this  end  the   governmental  absorption  of  services  must 

(i)Proceed  as  rapidly  as  does  the  expansion  of  new  fields  of  oppor- 
tunity by  the  progress  of  inventive  science  (and  it  is  now  proceeding  more 
slowly  than  that)  ;  and 

(2)  Must  be  consciously  undertaken  for  the  purpose  of  attaining  a  serv- 
ice performed  at  cost.  Otherwise,  that  is,  if  profit  is  to  be  sought,  it 
makes  little  difference  whether  any  particular  service  be  nominally  in 
public  or  in  private  hands.  In  the  latter  case  the  people  will  be  robbed 
of  more  cash  and  will  suffer  more  ethical  degeneration  of  individuals  and 
of  community-standards;  but  of  neither  will  they  be  so  painfully  conscious 
as  in  the  former  case. 


442  THE    COST    OF    COMPETITION 

effective  In  all  corporate,  profit-making  services  which  are 
operated  In  the  Interests  of  the  stockholder:  the  profit  is 
sought,  the  prices  are  made  and  gained,  by  one  organiza- 
tion, the  selling  one;  the  funds  are  handled  and  accounted 
by  a  quite  distinct  one.  The  history  of  the  post-office, 
for  Instance  of  a  public  service  publicly  managed,  evinces 
this  fact.  There  has  been  plenty  of  plain  peculation,  but 
there  has  been  no  effort  made,  nor  is  any  imaginable, 
toward  the  illegal  acquisition  of  moneys  by  forcing  the 
selling-price  of  postage  above  the  cost.  The  history  of 
the  Philadelphia  gas-works  reveals  the  same  state  of 
affairs.  So  long  as  it  was  publicly  owned  and  operated, 
Philadelphia's  most  unscrupulous  political  machine  could 
do  nothing  to  extract  boodle  from  it.  All  that  they  could 
and  did  do  was  to  surreptitiously,  and  yet  flagrantly,  force 
up  the  labor-cost  and  neglect  and  depreciate  the  works 
themselves,  so  as  to  bring  public  ownership  into  disrepute 
and  thus  lead  to  the  lease  of  the  works  back  into  private, 
profit-seeking  hands. ^^ 

12  For  the  history  of  these  matters,  see  the  pamphlet  upon  the  subject 
by  Mr.  Acker.  The  feature  of  greatest  interest  in  this  connection  is  the 
readiness  of  Mr.  Wanamaker  to  take  over  the  gas-works  and  operate 
them  for  the  city  (since  they  were  to  be  lost  to  the  city  anyhow)  upon  a 
basis  very  much  more  favorable  to  the  citizens  than  that  secured  to  the 
successful  bidder  by  the  machine.  It  was  because  he  was  public-spirited 
that  he  failed.  It  was  because  he  proposed  to  furnish  gas  practically  at 
cost,  with  the  elimination  of  all  but  nominal  profits,  that  the  political 
bosses  would  not  allow  him  to  get  the  honorable  opportunity. 

The  final  act  in  this  long  farce-drama  of  wolf-in-sheep's-clothing,  the 
recent  effort  of  the  United  Gas  Improvement  Company  and  its  allies  to 
secure  the  lease  of  the  gas-works  from  the  city-government  for  a  long  term 
of  years  at  an  absurdly  low  price,  with  the  cloudburst  of  public  indigna- 
tion which  formed  its  anti-climax,  is  too  fresh  in  the  minds  of  our  readers 
to  need  review  here.  As  a  bald  instance  of  the  natural  desire  of  both  the 
profit-gatherers  and  the  political  machine  to  convert  every  tool  possible 
away  from  use  upon  the  sale-at-cost  plan  to  the  profit-tax  plan,  the  inci- 
dent has  been  unsurpassed.  If  there  be  any  sober  mind  in  the  country 
which  still  questions  this  final  and  complete  identification  between  the  profit- 
seeker  and  the  corruptionist,  he  will  never  lie  converted  to  the  plain  lesson 
of  fact. 


THE   COST   TO   THE   COMMUNITY         443 

It  is  not  the  temptation  to  simple  thievery  inv^olved  in 
the  public  ownership  and  operation  of  public  services 
which  frail  human  nature  cannot  withstand,  but  the  enor- 
mously greater  temptation  to  profit-squeezing  out  of  the 
public,  to  any  extent  and  at  the  cost  of  the  public  being 
squeezed,  before  which  it  inevitably  falls.  The  cartoons 
of  the  United  States  or  local  treasuries  opened  up  to  pecu- 
lation under  the  banner :  "  The  lid's  off.  Come  on,  boys !  " 
cannot  more  than  suggest  the  present  actual  situation  of 
the  community-wealth  of  the  nation,  scattered  throughout 
the  pockets  of  eighty  millions  of  purchasers  and  a  prey  to 
the  attacks  of  the  profit-seekers.  There  the  lid  is  not  only 
off;  tJiere  never  iiuis  any  lid.  There  the  Invitation  is  not 
a  whispered  one,  sent  from  behind  averted  hand  to  a 
favored  few;  Instead,  It  is  the  national  motto:  "  Succeed 
In  business,  at  whatever  cost  to  the  consumer !  "  and  it  is 
thundered  at  the  youth  and  ambition  of  the  land  from  the 
time  they  are  able  to  follow  the  simplest  monetary  trans- 
action until  they  grow  too  senile  to  exact  a  profit.  We,  as  a 
nation,  carry  on  an  avowed  and  systematic  defalcation  of 
each  other's  welfare  upon  a  scale  never  before  known  to 
man.  Mr.  Thomas  W.  Lawson  holds  up  his  hands  In 
astonishment  and  horror  at  the  "  steal  "  of  thirty-six  mil- 
lions of  dollars  by  the  "  system."  "  What  would  not 
thirty-six  millions  of  dollars  buy  of  good  for  the  land !  " 
And  yet,  Mr.  Lawson,  wherefore  the  excitement?  Thirty- 
six  millions  is  but  a  bagatelle  compared  to  what  that  larger 
system,  of  national  dimensions,  known  as  the  competitive 
system,  annually  lifts  out  of  the  people's  pockets.  Thirty- 
six  billions  per  annum  would  be  nearer  the  figure,  though 
even  then  too  modest.  That  Is  what  It  costs  us,  and  much 
more,  to  support  the  barter  of  the  ten-cent  counters  and  the 
New  York  and  Boston  stock-exchanges.  Mr.  Lawson 
himself,  and  all  his  stables  and  yachts,  with  the  whole  of 


444  THE    COST    OF    COMPETITION 

his  detested  "  system  "  piled  on  top,  are  but  as  a  drop  in 
the  bucket  compared  with  the  sum  total  of  useless  luxury, 
useless  waste  and  useless  pain  which  we,  the  consumers, 
sport  and  support  In  the  name  of  "  free  "  competition. 
Freedom !  Once  again,  O  Liberty,  has  thy  dear  name  been 
taken  in  vain ! 

There  is  no  space  here  for  the  citation  of  a  multitude  of 
detailed  facts,  nor  is  it  to  our  purpose.  Our  aim  is  to 
straighten  out  the  present  widespread  confusion  of  cause 
with  effect.  The  facts  the  reader  can  look  up  for  himself, 
from  the  news  of  the  day  or  from  the  past  history  of  com- 
mercialism. Read  the  history  of  any  corruption  you  choose, 
or  of  any  great  money-making  corporation.  Look  up  the 
records  of  Boss  Tweed,  of  the  civil-war  contracts,  of  the 
Pacific  railroads,  of  the  Hoosac  tunnel,  of  the  Standard 
Oil,  of  New  York  Rapid  transit,  of  Philadelphia  and  Bos- 
ton gas-interests,  of  the  purchase  of  Delaware's  senatorial 
seat,  of  the  current  post-office  scandals,  or  of  a  thousand 
other  similar  instances.  They  all  reveal  one  thing:  a  diver- 
sion of  a  portion  of  the  profits, made  or  prospective,  of  some 
business  into  corruption-funds  with  which  to  expand  the 
opportunity  for  profit.  If  there  were  no  such  thing  as 
profits  recognized  by  public  opinion  or  law,  if  all  goods 
were  purchasable  at  the  cost  of  production  from  a  public 
agent,  there  would  be  no  funds  from  which  to  purchase 
governments.  Recent  history  uniformly  confirms  this 
statement.  Whenever,  in  a  city  burdened  by  a  machine, 
there  has  arisen  a  question  as  to  the  future  ownership, 
public  or  private,  of  a  public  service,  the  machine  has  uni- 
formly stood  for  private  ownership.  Under  private  owner- 
ship there  were  profits  which  must  be  shared,  there  was 
"  fat  to  try  out."  The  machine  would  have  its  share. 
Under  public  ownership  there  would  be  nothing  to  divide. 
In  St.  Louis,  Mr.  Steffins  says:     "  But  the  grandest  idea 


THE    COST   TO   THE    COMMUNITY  445 

of  all  came  from  Philadelphia.  In  that  city  the  water- 
works were  sold  out  to  a  private  concern,  and  the  St. 
Louis  fellows  [the  political  grafters]  have  been  trying 
ever  since  to  find  a  purchaser  for  theirs.  They  are  worth 
at  least  $40,000,000.  But  the  boodlers  thought  they 
could  let  it  go  at  $15,000,000,  and  get  $1,000,000  or  so 
themselves  for  the  bargain.  ...  It  will  be  done 
some  day."  But  not  if  the  heresy  that  any  private  party 
may  legally  own  a  public  service,  as  a  means  for  collect- 
ing a  tax  from  the  people  in  the  shape  of  profit,  has  died 
out  by  that  time. 

Embezzlement  amounts  to  nothing  compared  with  this. 
That  process  is  now  chiefly  rife  in  private  banking-offices, 
by  cashiers  earning  the  starvation-wage  for  their  class. 
But  even  then,  at  its  worst,  what  does  it  amount  to?  "  The 
little  looters!"  exclaimed  Justice  Jerome,  at  one  of  the 
meetings  of  the  political  campaign  against  the  New  York 
machine:  "What  are  they  to  the  octopus  that  holds 
the  whole  city  in  its  grasp  ?  "  That  octopus  is  a  system 
embodying  all  the  great  profit-making  corporations  of  the 
city,  chiefly  those  engaged  in  services  widely  recognized 
as  public  ones.  These  are  the  arms  which  suck  the 
strength  from  the  people  in  the  shape  of  profits  and  divi- 
dends. Tammany  is  merely  the  clearing-house  for  their 
activities,  the  central  head  of  the  octopus,  with  its  hideous 
single  eye  to  profit.  At  its  soft  invulnerability  are  hurled 
in  vain  the  blows  which  should  be  aimed  at  the  enveloping 
arms,  the  myriad  of  whose  suckers  feed  upon  our  dally 
life-blood. 

As  to  the  exploitation  of  the  profits  from  hired  vice,  the 
understanding  of  that  refers  back  to  the  unemployed.  It 
is  one  step  more  illegal  and  immoral  than  the  other,  but 
only  one. 


446  THE    COST    OF    COMPETITION 

What  has  already  been  said  regarding  prostitution  ap- 
plies very  largely  to  gambling.  Drunkenness  is  somewhat 
different  in  origin.  Here,  instead  of  the  money  being 
made  by  the  sale  of  one's  own  soul,  it  is  by  the  sale  of 
another's.  So  long  as  a  profit  of  a  few  cents  is  obtainable 
from  each  glass  of  liquor  swallowed,  just  so  long  will 
millions  of  dollars  be  spent  annually,  by  the  brewers,  dis- 
tillers and  saloon-keepers,  in  keeping  active  the  consump- 
tion of  liquor.  It  takes  thousands  of  glasses  of  the  slow 
poison  to  kill  a  man  and  remove  him  from  the  ranks  of 
contributers.  His  soul  is  well  worth  exploitation  for 
profit. 

Of  all  these  trickling  streams  of  profit,  from  the  sale 
of  liquor,  women  and  "  suckers  "  gullible  into  gambling, 
the  boss  gathers  his  share  exactly  as  the  captain  of  in- 
dustry gathers  his  from  the  profits  on  oil,  coal,  gas, 
transportation,  telegrams,  beef,  ice,  etc.  The  successful 
boss  has  exactly  the  same  peculiar  sort  of  ability  as  has 
the  successful  business  man.  He  can  organize  his  workers 
into  a  maximum  state  of  efficiency;  he  can  develop  his 
field  of  operations  to  its  maximum  extent  and  fecundity; 
he  knows  by  instinct  just  how  much  charge  his  traffic  will 
bear;  he  performs  a  public  service,  in  that  he  employs 
many  men  who  need  work  in  supplying  things  which  people 
will  pay  for.  Indeed,  in  so  far  as  distinctions  may  be 
based  upon  the  thing  supplied,  the  boss  has  the  balance 
of  right  over  the  business-man :  for  he  supplies  unneces- 
saries,  while  the  business-man  supplies  necessaries.  It  is 
a  common  doctrine  that  it  is  all  right  to  tax  the  former, 
but  that  the  latter  should  go  free.  Wherefrom,  the  taxing 
of  beef  and  coal  with  a  profit  is  infinitely  worse  for  the 
community  than  the  taxation  of  "  wine,  women  and  song." 
The  boss  has  to  fight  for  his  life  with  his  competitors; 
he  has  to  contend  with  dissatisfaction  and  revolt  on  the 


THE    COST   TO   THE    COMMUNITY  447 

part  of  his  assistants;  he  must  take  heavy  risks;  he  must 
work,  or  be  alert  to  work,  night  and  day.  There  has 
never  been  advanced  an  argument  in  defense  of  the  enor- 
mous private  incomes  won  in  business  which  does  not 
apply  equally  and  exactly  to  the  defense  of  able  corrup- 
tion. All  of  them,  it  might  be  added,  also  apply  equally 
to  a  defense  of  piracy  or  privateering. 

The  remedy  for  all  of  this  lies  in  the  placing  of  more 
responsibility,  not  less,  upon  the  organized  governmental 
government  of  the  land,  and  the  reduction  of  public  trust 
in  its  unorganized  and  irresponsible  commercial  govern- 
ment. Quibble  as  we  may  over  terms,  both  of  these  are 
governments.  Of  the  two,  indeed,  the  latter  is  plainly 
much  the  more  powerful.  Its  duties  and  responsibilities 
are  plainly  much  the  greater.  These  enormous  duties 
and  responsibilities  we  cannot  escape.  A  community 
of  seventy  millions  of  souls  finds  in  its  internal  relation- 
ships and  interactions  energy-transformations  occurring 
upon  a  prodigious  scale.  The  number  of  dollars  which 
are  flashed  into  or  out  of  existence  by  any  act  affecting  it 
broadly,  made  in  wisdom  or  in  folly,  can  be  numbered  only 
by  the  tens  of  millions.  Of  lives  similarly  encouraged  or 
blasted  the  enumeration  must  run  into  the  tens  of  thou- 
sands. These  facts  hang  over  the  heads  of  our  public 
men  like  swords  of  Damocles.  Whether  we  call  them 
public  men  and  award  them  the  dignity,  the  responsibility 
and  the  protection  which  accompanies  public  oflice,  or 
whether  we  call  them  private  citizens  and  leave  them  in 
the  ignominy,  the  irresponsibility  and  the  uncertainty  of 
men  who  perform  public  acts  and  accept  public  profits 
without  public  commission,  is  a  secondary  question.  The 
acts  must  be  performed.  Single  men  must  have  placed  in 
their  hands  the  power  and  the  responsibility  of  deciding 
and  doing,  either  well,  ill  or  not  at  all,  upon  the  tremen- 


448  THE    COST    OF    COMPETITION 

dous  scale  of  American  national  activities.  There  is  no 
question  as  to  the  wisdom  of  the  deliberate  "  centraliza- 
tion "  of  power.  Whether  any  man  or  any  political  party 
wants  centralization  or  not,  it  is  going  steadily  on  and 
will  continue  to  do  so.  Those  who  accept  the  fact  and 
bend  their  methods  to  suit  it  will  succeed;  those  who 
vainly  kick  against  the  prick  of  natural  evolution  will  fail 
and  die.  As  population  increases,  as  geography  widens, 
as  diversity  of  specialization  ramifies  throughout  both, 
coordination  necessarily  follows,  and  grows  from  an  in- 
teresting incident  into  a  fundamental  guiding  principle. 
Coordination  or  dissolution, — that  is  now  our  sole  ques- 
tion:  as  a  nation,  to  be  or  not  to  be. 

Whatever  may  have  been  the  slings  of  outrageous  for- 
tune, there  has  never  been,  in  the  history  of  our  country, 
any  hesitation  in  the  ultimate  decision  of  this  question. 
There  was  none  in  1861.  There  will  be  none  in  1909. 
State-rights  must  fade  and  disappear  before  the  needs  of 
a  nation  grown  to  a  degree  where  its  more  active  citizens 
have  lived  in  a  half  a  dozen  States  in  succession  and  must 
cover  thousands  of  miles  of  territory  in  each  week's  atten- 
tion to  business.  Distracting  individual  selfish  interests 
can  no  longer  be  considered  in  a  state  of  affairs  where  one's 
every  act  affects  millions.  Our  directors  of  the  production 
of  food,  coal,  steel  and  transportation  are  de  facto  public 
men.  By  any  other  name  they  are  the  same.  There  is  no 
question  of  how  much  power  we  shall  give  them.  A  maxi- 
mum of  power  they  now  possess.  The  sole  question  is: 
How  best  shall  it  be  directed?  How  can  we  best  choose 
the  men, — by  public  initiative,  the  office  seeking  the  man 
and  prizing  his  patriotism,  or  by  private  initiative,  the 
man  seeking  the  office  and  coveting  its  privileges?  What 
shall  determine  his  best  fitness  for  the  position, — his 
ability  to  elevate  prices  and  most  heavily  tax  the  people 


THE    COST   TO   THE    COMMUNITY         449 

in  the  form  of  profits,  as  in  his  private  commercial  selec- 
tion, or  his  ability  to  reduce  prices  and  keep  down  the 
general  cost  of  living,  as  in  his  public  selection?  How  can 
we  best  bring  out  his  best  sense  of  responsibility  to  his 
office  and  his  best  value  to  the  community, —  by  offering 
him  the  maximum  reward  when  he  makes  prices  the 
highest,  as  when  we  pay  him  in  the  form  of  profits,  or  by 
offering  him  the  maximum  reward  when  he  makes  prices 
the  lowest,  as  when  we  pay  him  in  the  form  of  a  public 
salary?  How  can  we  keep  the  common  people  best 
mindful  of  their  interest  and  duty  in  good  government, — 
by  making  that  government  not  only  one  of  their  own 
voices,  but  one  in  control  of  their  daily  necessaries  of  life, 
or  by  presenting  to  them  the  present  dual  and  inconsistent 
alternative:  of  a  governmental  government,  on  the  one 
hand,  in  which  they  have  full  control  but  no  direct  in- 
terest as  to  its  efficiency,  and  of  a  commercial  government 
by  corporations,  on  the  other  hand,  in  whose  efficiency  they 
have  the  most  vital  interest,  but  in  whose  control  they  have 
no  voice  whatever? 

These  are  the  national  questions  of  the  hour.  Upon 
their  settlement  hangs  the  fate  of  the  nation,  and  not 
upon  the  strength  of  individual  character,  as  President 
Roosevelt  and  Mr.  Riis  frequently  urge.  Without 
character  there  is  nothing,  of  course.  But  with  an  ample 
supply  of  individual  force  of  character  there  is  not  neces- 
sarily a  nation.  A  bale  of  first-class  manila  fibers  does 
not  necessarily  constitute  a  strong  rope,  nor  even  a  rope 
at  all.  All  depends  upon  the  skill  with  which  the  indi- 
vidual fibers  are  laid  together,  how  closely  their  interests 
are  artificially  interwoven.  The  leaders  of  the  Goths  and 
Vandals  commanded  men  of  sterling  character,  of  a  char- 
acter the  force  of  which  still  surges  through  our  veins; 
but  they  had  no  country  and  no  abiding  national  life;  they 


450  THE    COST    OF    COMPETITION 

possessed  no  social  Institutions.  There  is  no  sign  of  a  lack 
of  individual  strength  of  character  among  the  Chinese; 
yet  what  are  they  as  a  nation?  The  vast  nebula  of  Orion 
contains  infinitely  more  of  both  mass  and  energy  than 
does  our  sol'ar  system;  yet  there  is  no  probability  that  it 
supports  a  single  cell  of  organic  life.  Not  only  is  inorganic 
material  energy  solely  a  matter  of  the  relationship  of  mass- 
portions  which  are  themselves  absolutely  inert,  but 
organic,  human  and  political  energy  are  also  purely  and 
solely  a  method  of  relationship,  of  degree  of  coordina- 
tion, of  unit  cells,  organs  or  citizens,  each  of  which, 
isolated,  is  impotent  and  passive. 

Mr.  Grover  Cleveland,  at  Chicago,  in  October,  1903, 
in  one  of  the  strongest  patriotic  speeches  which  has  been 
recently  put  forth,  said :  "  There  is  abroad  in  our  land  a 
self-satisfied  and  perfunctory  notion  that  we  do  all  that 
is  required  of  us  in  this  direction  when  we  make  profession 
of  our  faith  in  the  creed  of  good  citizenship  and  abstain 
from  the  commission  of  palpably  unpatriotic  sins.  This 
belief  is  inevitably  the  parent  of  a  sort  of  self-righteous 
contentment,  which  leads  us  on  quite  well  under  the  direc- 
tion of  those  who  make  political  activity  their  occupation. 

"  Give  to  our  people  something  that  will  concentrate 
their  common  affection  and  solicitous  care, — and  let  that 
be  their  country's  good;  give  them  a  purpose  that  stimu- 
lates them  to  unite  in  lofty  endeavor — and  let  that  pur- 
pose be  a  demonstration  of  the  sufficiency  and  beneficence 
of  our  popular  rule;  and  we  shall  find  that  in  their  political 
thought  there  will  be  no  place  for  the  suggestions  of  sor- 
didness  and  pelf." 

According  to  this  it  would  appear  that  it  is  scarcely' 
necessary  to  make  the  profit-taxing  of  the  community  in 
barter  illegal  and  publicly  odious,  in  order  to  rid  the  nation 
of  "  graft,"  although  to  do  so  would  be  a  great  step  for- 


THE    COST   TO   THE    COMMUNITY         451 

ward.  Such  extreme  optimism  as  this  I  hardly  share.  Yet 
certain  it  is  that  if  we  make  the  people  conscious  that  they 
control  their  own  destinies,  both  political  and  economic, 
by  having  their  ballots  directly  control  the  directors  of 
our  great  economic  services,  there  will  be  little  trouble  in 
getting  their  response  to  any  reasonably  patriotic  appeal. 
Russia  may  say  that  her  moujiks  must  be  something  else 
than  moujiks  before  she  recognizes  them,  politically,  as 
men.  Glasgow's  director  of  municipal  enterprises  may  say 
to  Chicago  that  she  must  become  even  as  Glasgow  before 
she  may  undertake  the  control  of  her  own  activities.  We 
who  think  are  far  enough  away  from  both  situations  to 
see  plainly  the  fallacious  placing  of  the  cart  before  the 
horse:  that  the  Russian  peasant  is  not  like  the  American 
farmer  chiefly  because  he  has  been  given  no  chance  to  be; 
that  Chicago  is  not  like  Glasgow  chiefly  in  that  her  public 
services  have  for  generations  been  placed  beyond  the  con- 
trol of  her  people  and  her  people  therefore  become,  to 
that  extent,  a  combination  of  irresponsible  tyrants  above 
and  (politically)  inefficient  slaves  below.  The  knock  of 
opportunity  at  the  door  is  what  awakens  man  to  action 
and  efficiency,  or  else  he  never  awakens.  Let  him,  ex- 
pectant, arise  betimes  with  energy,  let  him  wait  through 
the  long  night  with  courage  and  persistence,  let  him  culti- 
vate skill  for  the  fray  in  his  waiting  hours  of  leisure;  if 
the  opportunity  is  never  accorded  him  to  act,  and  to  act 
effectively,  he  lives  and  dies  passive  and  unknown.  Inert, 
weak  and  futile,  he  is  as  one  of  our  manila  fibers  jailed 
within  the  dark  disorder  of  the  bale. 

Education 

The  history  of  the  American  nation  has  taught,  pri- 
marily, two  fundamental  lessons:  first,  the  valu6  and  re- 
liability of  truly  popular  government;  secondly,  the  im- 


452  THE    COST    OF    COMPETITION 

portance  of  widespread  opportunity  for  efficient  education. 
It  has  just  been  shown  how  effectively  the  presence  of 
barter  upon  a  large  and  commanding  scale  negatives  the 
former.  It  is  easy  to  point  out  in  how  many  ways  it 
interferes  with  our  conscientious  efforts  at  securing  the 
latter. 

It  is  to  be  noted  at  the  start  that  our  standard  system 
of  complete  education  embraces  two  portions,  viz. :  the 
public  school  and  the  privately  endowed  college,  which 
apparently  illustrate  the  two  distinctive  methods  of  sup- 
port which  have  been  displayed  in  these  pages  in  such 
marked  contrast.  According  to  off-hand  methods  of  de- 
duction, if  public  organization  is  so  much  more  efficient 
than  private,  then  we  should  be  able  to  see  the  fact  plainly 
in  the  contrasted  effectiveness  of  the  public  schools  and 
state  universities  on  the  one  hand  and  the  privately  en- 
dowed colleges  on  the  other.  It  is  to  bring  out  clearly 
the  superficiality  of  any  such  method  of  argument,  as  well 
as  to  show  the  true  connection  between  barter  and  educa- 
tion, that  this  argument  is  put  forth. 

It  has  been  urged  in  these  pages  that  the  only  natural 
method  of  accountance  is  to  charge  the  consumer  for  each 
service  just  what  that  service  costs.  In  the  commercial 
field  is  found  the  universal  policy  of  charging  the  con- 
sumer more  than  that  cost,  by  the  amount  of  interest, 
profit  and  the  cost  of  barter.  In  the  educational  world  is 
found  the  almost  universal  rule  of  charging  less  than 
cost. 

The  public  schools,  for  Instance,  nominally  charge 
nothing;  but  they  do  collect  the  entire  current  cost  of 
education  in  the  form  of  taxes,  first  through  the  medium 
of  the  city  government,  which  assesses  the  commercial, 
industrial  and  financial  interests,  and  then  through  the 
medium    of   this    commercial    organization    itself,    which 


THE    COST   TO    THE    COMMUNITY         453 

transfers  that  tax,  under  the  name  of  one  of  the  costs  of 
doing  business,  to  the  individual  consumers  of  the  com- 
munity. The  state  universities  do  much  the  same.  The 
privately  endowed  colleges  collect  a  tuition  fee,  but  that 
fee  is  always  less  than  the  cost  of  the  service.  A  few 
private  boarding-schools  and  academies  of  the  more  ex- 
pensive sort  habitually  charge  more  than  the  cost  of 
service,  and  operate  in  general  upon  a  commercial  basis; 
but  they  are  markedly  in  the  minority. 

It  seems  obvious  that  all  of  these  plans  are  open  to  sub- 
stantial objection.  The  best  plan  of  all  is  that  of  the  public 
school.  Here  the  objectionable  features  which  develop 
in  practice  are  the  result,  not  of  the  method  of  handling 
the  school's  accountance,  but  of  the  profit-seeking  methods 
which  are  employed  in  all  other  services  throughout  the 
land.  The  palpable  faults  in  our  public  school  system 
may  be  briefly  listed:  Incompetence  of  teachers,  due  to 
political  appointment;  insufficient  equipment;  the  jug- 
gling of  text-books. 

The  question  of  incompetence  of  teachers  falls  right 
into  line  with  any  other  form  of  public  corruption.  The 
pressure  from  lack  of  employment  and  from  the  starva- 
tion-wage urges  young  men  and  women  to  seek  every  pos- 
sible aid,  by  political  "  pull  "  or  otherwise,  to  the  securing 
of  employment.  It  makes  it  the  chief  aim  of  the  ward- 
politician's  power  to  furnish  employment  for  his  constitu- 
ents. Since  their  gratitude  and  votes  are  worth  dollars  to 
"  the  machine,"  the  school-teaching  appointments  are  nor- 
mally considered  among  the  "  plums "  the  picking  of 
which  belongs  regularly  to  the  politician.  Since  the  remedy 
for  this  situation  will  come  only  with  time,  as  the  volume 
of  barter  within  the  land  slowly  diminishes  under  the 
pressure  of  its  own  instability,  there  is  no  more  reason  to 
urge  it  as  an  argument  for  immediate  action  than  there 


454  THE    COST    OF    COMPETITION 

Is  to  urge  the  servant-girl  question  or  the  trades-union 
situation  with  a  like  purpose. 

The  same  may  be  said  as  to  the  insufficient  equipment. 
Mr.  RIIs  has  said  that  he  has  been  unable  to  identify  any 
man  or  set  of  men  who  actively  and  maliciously  seek  to 
deny  to  the  public  a  sufficiency  of  parks  and  school-houses. 
Those  whose  business  it  is  to  see  to  it  are  not  actively 
opposed  to  the  city's  having  plenty  of  both;  they  are 
merely  preoccupied  and  neglectful.  They  have  other 
"  business."  Both  the  city  office-holders  whose  official 
duty  it  is  to  see  that  such  things  are  provided  and  the  pros- 
perous citizen  whose  unofficial  duty  It  is  to  look  after  the 
official  and  see  to  It  that  he  Is  efficient,  are  otherwise  occu- 
pied. They  have  both  had  Ingrained  in  them,  by  life-long 
tutelage,  the  habit  of  asking  themselves  before  under- 
taking any  task:  "  Why  should  I  do  this?  What  is  there 
in  it  for  me?  "  If  there  be  no  immediate  profit  visible, 
it  is  only  good  "  business  "  to  leave  the  thing  undone. 

The  juggling  of  school-books  is  a  more  direct  and 
obvious  result  of  the  competitive  system.  The  publishing 
service  of  the  country,  not  being  organized  with  a  sole  view 
to  furnishing  the  best  possible  educational  aids  at  the  least 
cost  to  the  community,  but  to  make  the  most  profit  that  is 
compatible  with  any  tolerable  efficiency  of  education  what- 
^  ever,  receives  Its  greatest  pecuniary  rewards  when  the  style 
of  text-book  is  altered  the  most  frequently. ^^  It  therefore 
expends  a  much  higher  grade  of  exertion  in  seeing  that  the 
books  are  frequently  changed  than  It  does  In  seeing  that 
their  quality  is  good.  And  this  great  expense  is  "  neces- 
sary," because  the  chief  part  of  the  job,  the  corruption  of 

13  I  do  not  mean  that  the  educational  publishers  do  not  desire  to  make 
their  work  the  best  possible;  but  that  what  they  desire  and  what  their 
business  permits  them  to  do  are  two  very  different  things, — as  is  the  case 
with  Dearly  all  business-men. 


THE   COST   TO   THE   COMMUNITY         455 

city  school-boards,  is  a  most  difficult  and  delicate  task  and 
calls  for  great  skill. 

Yet,  in  spite  of  all  these  flaws,  the  public  school  is  still 
the  center  and  the  citadel  of  our  sense  of  civic  unity;  and 
of  it  the  public  library  may  be  deemed  a  part.  There  is 
no  service  demanded  of  man  by  man  in  which  is  required 
such  height  of  ideal  as  in  the  education  of  the  young. 
There  is  none  so  pregnant  with  good  or  evil  for  the  future 
of  the  individual  and  the  state.  Therefore  was  this  serv- 
ice one  of  the  first  to  be  removed  from  the  evils  of  private 
profit-seeking  in  its  conduct.  The  teachers  may  be  poor, 
the  methods  may  be  worse;  but  the  close  contact  of  the 
child  with  a  miscellaneous  populace  of  its  own  age,  per- 
meated with  a  purer  spirit  of  democracy  than  any  adult 
may  ever  know  and  with  the  strength  had  only  from  num- 
bers and  diversity,  is  fostering  of  truer  strength  and 
balance  against  future  trials  than  can  be  had  in  any  other 
way.  Says  Mr.  Jacob  Riis,^^  in  connection  with  President 
Roosevelt's  use  of  the  public  schools  for  his  own  children : 
"  So  only  can  we  get  a  grip  on  the  real  life  we  all  have  to 
live  in  a  democracy  of  which,  when  all  is  said  and  done,  the 
public  school  is  the  main  prop.  So,  and  in  no  other  way, 
can  we  hold  the  school  to  account,  and  so  do  we  fight  from 
the  very  start  the  class-spirit  which  is  the  arch-enemy  of 
the  Republic."  There  is  no  greater  sign  of  weakness  in 
the  class  of  people  which  is  regarded  as  the  winning  one 
in  the  present  race  for  wealth  than  its  combined  fear  and 
scorn  of  the  public  school  as  the  best  field  for  the  natural 
development  of  its  children. 

The  people  as  a  whole  have  no  suggestion  to  make  for 
a  return  of  the  schools  to  private  control.  All  innova- 
tions, Indeed,  as  of  free  text-books,  show  a  tendency  in  the 
opposite  direction.     So,  while  we  must  regard  our  schools 

1^  The  Outlook,  1904,  page  556. 


456  THE    COST    OF    COMPETITION 

as  far  below  what  they  might  be,  because  of  the  prevalence 
of  barter  in  all  other  services, — chiefly  because  it  reduces 
the  average  teacher's  salary  to  about  one-tenth  of  the  aver- 
age bargainer's  income, — yet  it  must  be  remembered  that 
they  are  infinitely  better  than  if  they  were  conducted  on 
the  commercial  plan,  with  private  profit  as  the  primary 
and  education  as  the  secondary  considerations  in  view. 

In  the  same  line  as  the  municipalization  of  the  schools 
in  the  past  and  of  the  school-books  in  the  present,  there 
is  abroad,  with  promise  for  the  future,  a  growing  recogni- 
tion of  the  futility  of  public  education  of  the  child  in  one 
direction  while  at  school  in  the  face  of  a  directly  opposite 
education  carried  on  at  home.  The  children  spend  a  thou- 
sand hours  yearly  at  school  and  four  times  that  time  in 
waking  hours  amidst  the  influence  of  the  home  and  its  sur- 
roundings. It  is  the  environment  of  the  latter  period,  an 
environment  in  the  great  majority  of  cases  almost  entirely 
beyond  the  control  of  the  parents,  which  constitutes  the 
true  education  allotted  to  the  child  by  the  republic.  Edu- 
cators universally  deplore  this  fact.  They  as  universally 
speak  of  it  as  irremediable.  By  the  educators  it  is,  but 
not  by  intelligent  public  action.  This  action  must  be 
taken,  to  the  reform  of  the  home-influence  and  environ- 
ment, before  the  most  perfect  methods  of  education  at 
school  can  have  appreciable  effect. 

So  it  is  not  the  public  school  system,  much  maligned  as 
it  may  be,  which  constitutes  our  most  fiery  text.  Nor  is  It 
the  private  academy  or  "  cramming-school  "  system,  com- 
mercialized as  It  Is,  either;  for  these  latter,  having  to  com- 
pete with  publicly  operated  schools,  must  always  evince 
the  greater  cost  of  profit-seeking  methods  and  so  make  this 
class  of  education  too  expensive  to  appeal  to  more  than  a 
minority.  It  Is  our  college-system,  instead,  the  faults  of 
which  are  becoming  more  palpable  as  the  college  grade  of 


THE    COST   TO   THE    COMMUNITY         457 

education  becomes  more  and  more  a  matter  of  course  for 
the  average  young  man  or  woman. 

Nor,  in  this  direction,  is  it  planned  to  preach  of  the 
more  obvious  evils.  Of  the  subservience  of  educational 
methods  and  doctrines  to  the  influence  of  the  private 
wealth  upon  which  the  college  relies  for  support,  for  in- 
stance, and  especially  of  the  evil  of  "  tainted  "  money, 
plenty  is  being  said  in  other  places.  That  it  constitutes  a 
fundamental  weakness  in  our  path  of  intellectual  progress 
no  thoughtful  man  can  deny.  A  few  professors  have 
resigned  their  positions  rather  than  bend  their  teachings  to 
the  money-pressure.  But  they  stand  as  but  a  token  of  the 
vast  number  of  those  who  prefer  the  other  horn  of  the 
dilemma:  to  alter  their  teachings  from  what  they  believe 
to  be  the  highest  truth  rather  than  to  risk  incurring  the 
antagonism  of  the  moneyed  source  of  power  or  of  the  gen- 
eral class  of  wealthy  and  influential  citizens.  My  own 
personal  acquaintance  with  college-professors  is  wide 
enough  to  warrant  the  assertion  that  this  evil,  consciously 
manifested,  is  very  widespread.  Unconsciously  mani- 
fested, it  is  almost  universal. 

Nor  is  it  planned  to  dwell  here  upon  the  small  pay  which 
the  competitive-wage  system  awards  to  the  teachers  of  the 
land.  This  feature  Is  one  of  the  most  Insidious  of  all 
the  evil  fruits  of  barter.  It  is  universally  admitted  that  the 
training  of  the  young  is  the  one  service  most  fraught  with 
the  seeds  of  national  success  or  failure  in  succeeding  gen- 
erations. That  we  should  pay  the  workers  in  this  service, 
on  a  rough  average,  some  one  or  two  hundredths  as  much 
as  we  do  those  who  care  for  our  current  stock  of  inert  cir- 
culating medium,  is  one  of  the  most  significant  indictments 
which  it  Is  possible  to  bring  against  our  present  plan  of 
wealth-distribution.  That  we  should  fail  to  provide  even 
so  unjust  a  plan  as  this  for  securing  to  them  the  means  for 


458  THE    COST   OF   COMPETITION 

leisurely  research,  leaving  that  whole  matter  to  the  hap- 
hazard of  private  personal  donation  instead,  making  of 
every  mran  who  longs  to  do  such  work  a  groveling  beggar 
at  the  very  start,  is  a  more  striking  fault  of  national 
organization;  but  it  is  not  one  more  fruitful  of  evil.  Cer- 
tainly there  could  be  little  excuse  for  surprise  if  the  col- 
lege-professors of  the  land  should  do  what  is  for  them  the 
only  sensible  thing:  to  form  a  union  and  then  strike  to 
compel  all  colleges  to  charge  the  full  cost  of  instruction — 
some  three  or  four  hundred  per  annum,  in  comparison 
with  the  one  or  two  hundred  now  asked — and  to  corre- 
spondingly increase  their  salaries.  When  the  services 
supplying  the  public  with  all  other  commodities  are  habitu- 
ally charging  the  consumer  from  two  to  five  times  the  real 
cost  of  supply,  and  that  without  effective  rebuke,  there 
seems  to  be  little  reason  why  the  college-teachers  should 
continue  longer  to  present  the  community  with  educations 
at  two-thirds  of  cost. 

Instead  of  any  of  these  evils,  all  of  which  others  seem 
now  and  then  to  see  and  preach  plainly,  it  is  most  fit  that 
in  this,  the  chapter  upon  the  ethical  cost  of  barter  to  the 
community  as  a  whole,  should  be  advertised  the  one  evil 
result  of  barter  upon  education  which  no  one  else  seems 
to  see,  albeit  it  is  as  widespread  as  is  population  and  is 
active  in  every  school,  no  matter  what  its  personnel  or  Its 
methods  of  organization.  I  refer  to  the  fundamental 
standards,  aims  and  ambitions  of  the  student  and  of  the 
teacher. 

It  may  be  that,  situated  as  I  am  In  a  technical  school,  I 
see  this  fault  in  an  exaggerated  light.  Certainly  It  does 
not  prevail  so  markedly  In  non-technical  schools,  in  the  old- 
fashioned  academic  departments.  But  because  this  Is  so 
these  academic  departments  are  being  deserted.  The 
students  are  flocking  Into  the  technical  schools  and  courses. 


THE    COST   TO    THE    COMMUNITY         459 

The  statistics  are  astonishing.  Even  the  publishers  are 
following  suit.  Within  the  past  two  years  a  half-dozen 
publishing  houses  which  never  before  handled  text-books 
of  any  other  than  the  classical  type  have  opened  their  doors 
to  the  technical,  and  particularly  to  the  engineering,  fields. 
It  might  be  Inferred  from  these  words  that  there  Is  to 
follow  In  these  pages  an  orthodox  crusade  in  favor  of 
abandoning  the  more  modern  "  materialistic  "  lines  of 
study  in  favor  of  the  older  classical  or  "  humanitarian  " 
ways.  Therefore  this  opportunity  Is  sought  at  the  outset 
for  a  formal  disavowal  of  any  such  a  purpose.  Nor  can 
this  disavowal  be  made  too  strong.  Not  only  is  the  rela- 
tive diminution  of  classical  studies  and  the  Increase  of  the 
natural  sciences  the  result  of  a  natural  evolution  In  educa- 
tional methods,  but  It  Is  one  upon  which  we  are  only  barely 
embarked  as  yet.  Indeed,  It  is  the  ambition  of  the  writer 
to  sometime  preach,  at  much  greater  length  than  Is  possible 
here,  the  doctrine  that  a  long-continued  familiarization 
with  the  natural  sciences  In  laboratory  and  class-room, 
sufficient  to  drill  not  only  the  intellect  but  even  the  Instinct 
into  a  grasp  of  their  common  fundamental  principles,  is 
the  only  proper  foundation  for  an  effective  understanding 
of  life-work  In  any  of  its  branches.  He  hopes  to  see  It 
widely  recognized  that  all  departments  of  human  activity 
are  but  forms  of  energy-transformation,  and  that  a  long 
drill  in  physics,  chemistry,  astronomy,  mechanics  and  ener- 
getics Is  just  as  essential  a  preparation  for  endeavor  in  the 
field  of  law,  journalism,  state-craft  or  the  ministry  of  the 
gospel  as  It  Is  now  regarded  for  the  practice  of  medicine, 
psychology,  navigation  or  the  several  engineering  profes- 
sions. The  day  of  the  direct  study  of  man  Is  gone.  His- 
tory and  the  dead  languages  we  ought  all  to  hope  to  enjoy, 
as  a  luxury  of  self-culture.  But  as  a  means  for  under- 
standing, rather  than  memorizing,  and  especially  for  pre- 


46o  THE    COST   OF   COMPETITION 

dieting,  human  action  they  are  of  almost  no  use.  Man  is 
now  firmly  installed,  in  modern  scientific  thought,  as  an 
ultimate  result  of  natural  evolution,  as  a  highly  intricate 
locus  of  inanimate  energy-transformations.  Therefore, 
the  proper  study  of  mankind  is  nature,  inert  and  organic, 
not  man.  When  the  true  reasons  underlying  the  form 
and  activities  of  the  stars,  the  molecules  and  the  mollusks 
are  once  known,  the  problem  of  human  life,  individual  and 
social,  will  have  been  nine-tenths  solved. ^^ 

Therefore  the  obstacle  here  descried  in  the  path  does 
not  consist  of  the  palpable  growth  of  preference  for  mate- 
rialistic over  classical  studies,  as  such.  It  consists,  rather, 
of  the  almost  universal  insistence,  to-day,  that  an  educa- 
tional course  shall  do  one  or  the  other  of  two  things: 
either  it  shall  amuse  or  it  shall  pay. 

The  demand  that  it  shall  amuse  rather  than  discipline 
the  pupil  comes  from  a  minority  only,  and  that  minority 
consisting  of  the  ones  who  can  afford  to  spend  four  years 
at  college  for  nothing  better  than  the  incidental  polish  of 
contact  with  a  thousand  of  one's  fellows.     These  pupils 

15  The  writer  would  here  reserve  the  right  to  future  sermons  upholding 
the  return  of  the  classical  studies  to  our  curricula.  It  is  not  that  he  esteems 
them  the  less  that  he  acquiesces  in  their  banishment,  but  that  he  prizes 
natural  truth  the  more.  It  is  not  that  he  dislikes  them  the  more  that  he 
urges  a  change,  but  that  he  contemns  somt  present  methods  most  of  all. 
The  ideal  educational  course  of  the  future  will  comprise,  first  and  as  a 
major,  the  study  of  nature,  as  a  source  of  mental  power.  In  second  and 
incidental  place  it  will  include  a  study  of  man  and  his  works,  as  a  source 
of  grace,  beauty  and  enjoyment.  Handicraft  it  will  also  teach,  as  an  art 
and  as  a  duty.  But  the  present  technical  training  of  the  hand  and  the 
mechanical  part  of  the  brain  into  a  maximum  fluency  of  duplication  of 
purely  wage-earning  tasks  it  will  reject  altogether,  as  no  proper  part  of 
youthful  education.  As  the  training  of  the  adult  specialist  this  policy 
may  continue  to  play  an  important  part;  but  it  cannot  constitute,  nor  aid, 
nor  aught  but  negative,  an  education.  The  lean  failures  of  men  of  the 
next  generation,  feeble-minded  and  unresponsive,  instances  of  arrested 
development  grown  out  of  our  present  output  of  automatons,  shall  bear 
sinister  witness  to  this  fact. 


THE    COST   TO   THE    COMMUNITY         461 

are  almost  universally  rich  men's  sons,  together  with  a 
scattering  of  sycophants.  They  are  numerous  enough  and 
momentarily  influential  enough  to  explain  the  rapid 
growth  of  the  elective  system  and  the  "  snap  "  courses 
which  render  it  so  attractive.  But  otherwise  this  class  of 
young  citizens  may  almost  be  ignored.  They  lack  dis- 
cipline, either  mental  or  bodily.  They  lack  earnestness. 
They  are  not  immoral,  but  they  are  weak.  They  lack,  in 
some  manner  or  other,  true  vitality.  They  live  fairly  long 
lives,  they  are  accredited  to  good  positions  in  society,  but 
they  do  not  do  the  world's  work  of  permanent  value. 
They  do  not  even  reproduce.  Their  blood  flows  not  in 
the  veins  of  the  next  generation.  A  turn  of  the  dial  and 
they  are  gone.  The  race  is  busily  engaged  in  sloughing 
them  off  by  natural  process,  and  they  need  concern  us  no 
more. 

The  demand  that  education  shall  pay,  and  pay  in  cash 
immediately  upon  graduation,  however,  may  not  be  so 
summarily  disposed  of.  It  does  not  come  from  the  mori- 
bund, but  from  the  lusty  and  e*arnest.  It  is  artificially 
forced  upon  them  by  the  pressure  of  competition,  rather 
than  natural  to  them,  it  is  true;  but  it  is  there,  nevertheless, 
born  and  bred  into  their  bones  and  become  a  part  of  their 
nature.  Nor  does  it  seem  to  surprise  anyone.  Indeed,  it 
is  honored.  Professors  and  instructors  expect  and  laud 
it,  even  rebuke  its  absence.  Presidents  and  heads  of  de- 
partments mold  their  courses  of  study  and  the  equipment 
of  their  laboratories  to  meet  it,  and  the  trustees  back  them 
up.  Alumni  urge  it  upon  their  institutions  with  earnest- 
ness, and  with  the  greatest  narrowness  of  mind  of  all.  In 
consequence,  the  general  plan  and  the  details  of  each 
course,  especially  the  technical  ones,  are  coming  to  be  built 
up  upon  the  fundamental  idea  that  the  institution,  in  order 
to  succeed,  must  turn  out  graduates  who  are  able  to  work 


462  THE    COST    OF    COMPETITION 

at  the  maximum  efficiency  of  money-getting  immediately 
after  graduation. 

It  is  time  that  that  portion  of  the  community  which 
takes  Interest  in  both  our  ethical  standards  and  our  intel- 
lectual progress  should  stop  and  ask  Itself:  "  Is  this 
right?  " 

To  raise  this  question  is  not  to  retire  to  the  exalted  but 
feeble  platform  of  the  visionary  aesthete  and  to  say:  "  All 
which  feeds  and  clothes  is  sordid.  Only  the  Nirvana  of 
the  true  love  of  abstract  beauty  is  our  proper  aim."  The 
weakness  of  all  such  thought  as  this,  wherever  It  may  be 
used  as  an  excuse  from  hard,  dirty  work,  It  Is  the  aim  of 
this  book  to  proclaim.  The  world's  work  is  essentially 
noble  and  ennobling.  He  who  raised  higher  standards 
of  altruism  than  the  world  has  ever  been  able  to  follow 
said:  "  Hew  the  wood  and  you  will  find  me;  cleave  the 
stone  and  there  am  I."  No,  It  Is  not  our  purpose  to 
breathe  one  syllable  against  the  training  of  both  lads  and 
lassies  to  the  habit  of  daily,  wholesome,  useful  work  In 
contact  with  the  soil,  but  rather  to  urge  It  strongly.  But 
this  Idea  of  training  them  to  earn  Immediate  cash  Is  a  very 
different  proposition. 

The  question  is:  What  is  the  world's  work?  What 
sort  of  work  is  most  useful  to  the  world  about  us, — not 
to  the  world  of  employers,  but  to  the  world  of  men  and 
women?     What,  too,  is  most  ennobling  to  ourselves? 

If  we  stop  to  look  about  us  at  the  achievements  of  the 
present  day,  if  we  analyze  modern  applied  knowledge  and 
trace  the  origin  of  our  most  useful  information  to  its 
source,  we  must  be  struck  with  one  universal  fact  about  It. 
JFIien  that  information  ivas  acquired  it  was  of  no  use  to 
anyone.  The  men  who  dug  it  from  the  darkness  of  chaos 
never  earned  a  cent  with  it. 

What  are  the  foundations  of  our  science  of  mechanics, 


THE    COST   TO   THE    COMMUNITY         463 

most  relied  upon  of  all  other  sciences?  The  laws  of  New- 
ton and  Kepler.  Who  laid  the  corner-stones  of  modern 
physics?  Archimedes,  Torricelli,  Boyle  and  a  long  list 
of  similar  men.  What  paved  the  way  for  modern  chemis- 
try and  made  possible  the  enormous  wealth-production 
which  it  supports  and  guides?  The  discovery  of  oxygen, 
by  an  unknown  Swedish  village-apothecary,  and  its  se- 
quence of  other  elements.  Where  would  the  present  invalu- 
able industries  in  applied  electricity  and  electro-chemistry 
disappear  to  should  we  suddenly  lose  all  record  of  the 
work  of  Franklin,  Faraday  and  Volta? 

These  are  trite  questions,  but  they  were  never  more 
needed  than  now.  Every  one  of  these  men  worked,  each 
one  of  these  discoveries  was  made,  in  utter  disregard  of 
any  monetary  return  for  the  effort  put  forth.  Indeed,  so 
far  as  all  considerations  of  money  and  comfort  are  con- 
cerned, there  was  every  possible  inducement  against  the 
work.  Poverty,  discouragement,  the  obscurity  of  neglect 
or  the  notoriety  of  persecution, — these  alone  were  the 
rewards  to  the  doers.  The  glittering  splendor  of  our  own 
extended  industry  was  the  reward  of  the  race,  but  it  was 
invisible  then,  even  to  the  far-seeing  eyes  of  these  few. 
To  these  the  love  of  knowledge  and  the  love  of  doing  were 
their  sole  excitants  and  their  whole  reward. 

It  would,  of  course,  be  puerile  to  urge  our  return  to  the 
tasks  of  our  fathers.  Theirs  was  the  opportunity  upon 
the  unbroken  field.  Basic  principles  always  come  first; 
and  while  there  are  plenty  of  these  yet  undiscovered,  yet 
it  was  but  natural,  to  a  degree,  that  they  should  lay  founda- 
tions and  we  gild  cornices.  But  are  we  not  a  little  hasty 
with  our  cornices, — being  perhaps  content  to  cap  solid 
granite  foundations  with  sheet-metal  pretense,  in  order 
that  our  superficial  gilt  may  find  expanse  to  rest  upon  be- 
fore the  solid  masonry  has  been  slowly  reared  to  a  finish? 


464  THE    COST    OF   COMPETITION 

Have  we  not  yet  need  for  Intellectual  hewers  of  hard  stone, 
— or  is  the  virile  growth  of  thought  now  completed  for  all 
time? 

However  this  may  be,  the  spirit  in  which  these  old 
pioneers  worked  will  never  be  out  of  date.  The  law  of 
Interaction  between  abstract  discovery  and  concrete  em- 
ployment will  never  lapse.  The  toil  of  one  man  In  the 
name  of  pure  science  to-day  Is  still  the  price  of  food  for 
the  millions  to-morrow.  By  that  method  shall  we  make 
Intellectual  progress,  or  we  shall  not  make  It  at  all. 

It  may  be  replied  to  this  that  such  Ideals  in  education 
are  all  well  enough  for  the  minority,  but  that  the  world 
demands  that  the  great  majority  should  stick  to  the  ham- 
mer and  the  distaff.  Right  there  Is  the  great  misunder- 
standing. So  far  as  can  now  be  seen,  the  law  lies  certain, 
not  only  upon  the  majority  but  upon  every  man,  that  he 
shall  himself  stick  to  the  hammer  In  his  own  support  dur- 
ing at  least  a  portion  of  each  day.  Our  so-called  "  upper 
classes  "  of  college-bred,  office-fed  men  are  even  now  dying 
out,  by  involuntary  race-suicide,  because  they  defy  this 
law.  It  is  the  worst  loss  of  the  winners  at  commercial 
competition  that  they  are  denied  this  wholesome  duty  and 
privilege.  But  whether  one  be  at  the  forge  or  in  the 
furrow,  in  the  library,  the  laboratory  or  the  forum,  the 
spirit  of  the  properly  taught  should  ever  be  the  same :  to 
work  solely  for  the  love  of  the  work  and  to  take  no  heed 
for  the  future  return  from  it.  If  one  can  do  this,  if  he 
never  feels  tempted  otherwise,  then  he  Is  educated.  He 
sees  what  is  invisible  to  the  uneducated.  He  sees  the 
divinity  of  work.  He  sees  the  beauty  of  all  things,  all 
times,  all  places.  He  sees  the  unity  of  all  nature  and  the 
unity  of  the  human  race.  He  sees  history  without  dates. 
He  sees  his  work  crowned,  utilized  and  enjoyed,  by  future 
generations  of  men  If  not  by  his  compatriots.     He  cannot 


THE    COST   TO   THE    COMMUNITY         465 

mistake.  He  acts  according  to  natural  law.  He  has  but 
to  sow  and  to  water;  God  will  grant  the  increase. 

But  so  soon  as  enters  the  question  of  an  immediate  cash 
payment  for  each  hour's  work  done,  all  this  majestic  pros- 
pect must  disappear.  The  thing  chosen  to  be  done  is  no 
longer  selected  by  natural  law  and  natural  impulse.  It 
becomes  subservient  to  the  dictates  of  the  purse-bearer. 
The  free  attraction  of  the  mind  toward  the  truth  is  ham- 
pered. The  line  of  progress  is  diverted.  We  abandon 
the  foot-paths  trodden  by  Aristotle  and  Galileo  to  become 
fan-wavers  behind  some  petty  throne.  When  we  finally 
drop  out  of  sight  we  leave  behind  us  no  one  thing  done 
which  Is  of  use  to  man  and  of  honor  to  us. 

This  is  the  lesson  so  needed  to  be  learned  by  the  world 
of  to-day:  that  the  great  bulk  of  current  pottering  and 
hammering  and  quill-driving  now  going  on  among  the 
millions,  in  shop  and  drafting-room  and  office,  is  but  dead 
pottering,  doing  nothing  which  the  world  will  permanently 
prize,  piling  up  obstacles  rather,  which  the  next  genera- 
tion must  wearily  take  down  again,  as  they  must  the  sky- 
scrapers,— leaving  no  more  mark,  with  all  their  zeal,  upon 
the  history  of  human  institutions  than  did  the  builders  of 
the  pyramids  or  the  upholders  of  the  Spanish  Inquisition, 
nothing  but  a  token  of  the  futile  weariness  and  pain  of  the 
unknown  myriads,  of  the  futile  pride  and  cruelty  of  an 
infamous  few,  but  of  constructive  aids  to  human  life  and 
hope  almost  nothing.^^ 

16  The  full  force  of  this  position  cannot  be  grasped  until  the  reader  shall 
have  finished  this  work  and  joined  the  author  in  his  view,  from  a  distance, 
of  the  natural  civilization  toward  which  we  are  struggling  and  drifting, 
and  of  its  contrast  with  our  present  semi-barbarism  of  industrial  profit- 
seeking.  Would  you  gain  this  perspective,  let  us  see  how  Taine  views 
similarly,  from  a  distance,  a  similar  epoch  in  the  twelfth  century.  He  is 
writing  chiefly  of  literature  and  makes  that  his  bull's-eye.  I  write  not  only 
of  literature,  but  of  ail  other  modes  of  ethical  expression:  art,  architecture. 


466  THE    COST    OF    COMPETITION 

To  bring  this  sermon  home  in  detail,  one  needs  but  ask 
what  fault  does  this  mistaken  policy  show  in  our  graduates 
of  to-day.  Wherein  is  present  education  failing?  Plainly 
in  this,  that  it  is  short-sighted. 

In  the  first  place,  it  is  inconsistent  in  its  advice.  It 
lauds  the  cultivation  of  earning-ability  and  at  the  same 
time  advises  education.  Yet  education  is  not  what  earns 
money.  Look  over  the  list  of  millionaires  and  multi- 
millionaires (excepting  those  so  young  as  to  have  inherited 
what  they  have)  !  How  many  of  them  possess  or  rely 
upon  college-educations?     How  many  do  not  pride  them- 

music,  invention,  constitutional  law,  anything  which  can  embody,  preserve 
and  transmit  high  ideals  for  the  support  of  future  races  of  men.  He  wrote 
of  a  time  when  things  moved  slowly,  when  three  centuries  were  as  three 
decades  now.  He  wrote  solely  of  the  scholastic  department  of  life,  then  the 
only  field  of  progress.  I  write  of  the  world's  workers,  of  the  builders  of 
our  nation's  outward  expression,  whether  professional  artists  or  wage- 
earning  designers  or  office-seated  leaders  of  men.  I  write  of  the  ideals 
which  imbue  them  and  which  they  owe  to  their  education,  wherever  they 
got  it.  I  write  of  the  dogma  which  shackles  them,  midst  an  age  of  fierce 
activity,  almost  into  paralysis, — just  as  did  Taine.  The  dogma  which  he 
condemns  was  the  Scholastic  Philosophy.  That  which  I  attack  is  the  Philos- 
ophy of  Commercial  Competition. 

"  Beneath  every  literature  there  is  a  philosophy.  Beneath  every  work 
of  art  is  an  idea  of  nature  and  of  life.  This  idea  leads  the  poet.  Whether 
the  author  knows  it  or  not,  he  writes  in  order  to  exhibit  it;  and  the  charac- 
ters which  he  fashions,  like  the  events  which  he  arranges,  only  serve  to 
bring  to  light  the  dim  creative  conception  which  raises  and  combines 
them.  Underlying  Homer  appears  the  noble  life  of  heroic  paganism  and 
of  happy  Greece.  Underlying  Dante,  the  sad  and  violent  life  of  fanatical 
Catholicism  and  of  the  much-hating  Italians.  From  either  we  might 
draw  a  theory  of  man  and  of  the  beautiful.  It  is  so  with  others;  and  this 
is  how,  according  to  the  variations,  the  birth,  blossom,  death  or  sluggish- 
ness of  the  master-idea,  literature  varies,  is  born,  flourishes,  degenerates, 
comes  to  an  end.  Whoever  plants  the  one  plants  the  other;  whoever  under- 
mines the  one  undermines  the  other.  Place  on  all  the  minds  of  any  age  a 
new  grand  idea  of  nature  and  life,  so  that  they  feel  and  produce  it  with 
their  whole  heart  and  strength,  and  you  will  see  them,  seized  with  the 
craving  to  express  it,  invent  forms  of  art  and  groups  of  figures.  Take 
away  from  these  minds  every  grand  new  idea  of  nature  and  life,  and  you 


THE    COST   TO   THE    COMMUNITY         467 

selves,  as  self-made  men,  upon  never  having  had  more 
than  a  common-school  education?  Why,  I  have  seen 
whole  sets  of  statistical  curves  projected  to  demonstrate 
the  superior  earning-capacity  of  technical  graduates  who 
had  had  a  post-graduate  course  over  those  who  had  not, — 
and  the  most  lucrative  position  listed  there  amounted  to 
some  six  or  seven  thousand  a  year!  The  average  income 
was  but  two  or  three  thousand.  But  how  about  the  in- 
comes of  sixty  or  seventy,  or  of  six  or  seven  hundred 
thousand?  How  about  the  much  more  common  rates  of 
sixteen  to  thirty  thousand?  How  many  post-graduate 
degrees  does  it  take  to  earn  those  Incomes? 

No,  these  incomes,  which  alone  constitute  success  of  the 

will  see  them,  deprived  of  the  craving  to  express  all-important  thoughts, 
copy,  sink  into  silence,  or  rave. 

"What  has  become  of  these  all-important  thoughts?  What  labor  worked 
them  out?  What  studies  nourished  them?  The  laborers  did  not  lack  zeal. 
In  the  twelfth  century  the  energy  of  their  minds  was  admirable.  At  Oxford 
there  were  thirty  thousand  scholars.  No  building  in  Paris  could  contain 
the  crowd  of  Abelard's  disciples;  when  he  retired  in  solitude,  they  accom- 
panied him  in  such  a  multitude  that  the  desert  became  a  town.  No  suffer- 
ing repulsed  them.  .  .  .  These  young  and  valiant  minds  thought  they 
had  found  the  temple  of  truth;  they  rushed  at  it  headlong,  in  legions, 
breaking  in  the  doors,  clambering  over  the  walls,  leaping  into  the  interior, 
and  so  found  themselves  at  the  bottom  of  a  moat.  Three  centuries  of  labor 
at  the  bottom  of  this  black  moat  added  no  single  idea  to  the  human  mind." 

The  italics  are  mine.  Is  there  no  parallel,  even  to  a  degree,  in  our  own 
day,  when  Harvard  and  the  University'  of  Michigan  have  grown  in  fifty 
years  from  hundreds  to  tens  of  thousands;  when  the  publishers  of  books 
report  their  lists  of  new  ones  not  only  by  the  scores  per  month,  but  per 
week,  apologizing  to  the  public  when  a  single  day  passes  without  the 
appearance  of  at  least  one  new  volume;  when  these  last  fifty  years  of 
forge-fires  and  hammer-blows,  of  new  fiction  and  peace-conferences,  finds 
just  as  many  people  oppressed  with  hunger  as  at  the  start,  finds  in  the  face 
of  an  unappeasable  appetite  for  reading-matter  almost  no  current  accumu- 
lation of  permanent  literature ;  finds  art  schools  and  galleries  and  societies 
galore,  with  no  art  in  them  but  that  of  the  copyist;  finds  a  science  of 
sociology  as  dumb  in  response  to  the  universal  questioning,  as  to  why  it 
all  is  so,  as  in  the  days  of  Adam  Smith? 


468  THE    COST    OF    COMPETITION 

worshiped  sort  to-day,  are  earned  by  schooling  of  another 
sort.  Imagine  this  wage-earning  advice  to  the  young  to 
be  consistent,  and  what  must  be  its  tenor?  First  and 
foremost,  not  to  go  to  college  at  all,  but  to  flee  from  the 
effete  shades  of  knowledge  unapplied  to  profit-making. 
Go,  instead,  into  business!  Do  business,  from  the  age  of 
fifteen  on  !  Breathe  and  eat  and  drink  business;  worship  it 
by  day  and  dream  of  it  by  night !  Reduce  every  feature 
and  opportunity  of  life  to  its  simplest  terms,  a  percentage! 
Learn  at  every  turn  to  take  all  that  the  law  allows, — and 
five  or  five  hundred  per  cent,  more  if  you  can  escape  detec- 
tion !  Learn  to  tax  and  browbeat  your  competitor  and  the 
general  public  to  the  last  degree,  gauging  most  accurately 
how  far  the  pressure  may  go  before  the  worm  will  turn ! 
Ah,  could  not  a  school  be  organized  which  would  really 
supply  what  these  innocent  misguiders  of  youth  advise 
them  to  seek?  The  main  fagade  would  be  crowned  with 
a  gilded  calf,  supported  on  the  one  hand  by  a  memorial 
statue  of  Tweed  and  on  the  other  by  one  of  Quay!  An 
imposing  string  of  Astors  and  Vanderbilts  for  trustees! 
Mr.  J.  P.  Morgan  for  treasurer!  Mr.  J.  Edward 
Addicks  for  president!  Mr.  John  D.  Rockefeller  for 
chaplain!  Mr.  Thomas  W.  Lawson  for  lecturer  upon 
ethics,  and  Messrs.  Hyde,  Harriman,  Hill,  etc.,  for  the 
rest  of  the  faculty!  Mrs.  Chadwick  for  librarian  (when 
she  gets  out)  and  Chief  Devery  as  athletic  director! 
The  amphitheater-lectures  would  illustrate,  by  experiment, 
the  art  of  making  your  man  give  an  order  or  take  a  price. 
Psychometric  dissection  of  the  living  consumer  would 
develop  the  exact  degree  of  abuse  bearable  before  revolt. 
Would  it  not  be  magnificent?  If  the  chief  end  of  man  is 
to  make  money,  then  the  chief  aim  of  education  must  be 
to  teach  him  how  to  do  it;  and  where  can  be  gotten  such 
inspiration  to  zeal  and  industry  in  this  laudable  direction 


THE    COST   TO   THE    COMMUNITY         469 

as  from  the  contemplation  of  those  who  have  succeeded 
in  surpassing  a  milhon  rivals  in  its  pursuit? 

Go  to!  Let  us  at  least  be  consistent!  Let  us  either 
close  our  college-doors  and  tell  the  youth  of  the  land  to 
go  elsewhere,  that  we  college-professors  do  not  know  what 
they  wish  to  learn,  or  else  let  us  say  to  them  plainly,  be- 
fore they  enter,  in  every  lecture,  in  our  every  deed  in 
laboratory  or  library,  that  the  one  lesson  which  we  have  to 
teach,  the  one  lesson  which  they  most  need  to  learn, — 
which  they  will  have  difficulty  enough  in  remembering, 
indeed,  against  all  the  temptation  of  the  outside  world, 
throughout  the  many  years  succeeding  our  brief  effort  at 
its  inculcation, — is  that  he  who  works  for  the  sake  of 
the  wage  works  to  naught,  and  that  only  he  who  fol- 
lows where  love  of  work  leads  him,  utterly  disregardful 
of  cost  or  consequences,  truly  serves  himself  and  all 
mankind! 

Furthermore,  this  indictment  of  short-sightedness  in  the 
present  college-course  can  be  argued  more  in  detail  than 
the  above.  It  aims  at  turning  out  a  graduate  who  can  do, 
during  the  five  or  ten  years  immediately  following  his  col- 
lege-course, with  the  maximum  speed,  the  things  which  the 
world  of  employers  was  wanting  done  at  the  time  when, 
or  just  before,  his  education  took  place.  He  must  be  able 
to  compute  and  draft  and  analyze  and  amputate  with  the 
maximum  of  celerity  and  skill.  In  other  words,  he  must 
be  the  most  profitable  of  employees, — for  he  is  an  em- 
ployee just  the  same,  even  if  he  be  a  surgeon,  if  he  operates 
chiefly  for  his  fee.  He  is  not  asked  to  plan  or  discover  or 
conceive  beauty  in  design;  that  earns  little  or  no  money. 

But  the  slip  in  the  argument  is  that  after  that  first 
decade  out  of  college,  by  the  time  he  finds  opportunity 
for  really  good  work,  he  has  dropped  all  the  details  of  his 


470  THE    COST    OF    COMPETITION 

college-education  below  the  horizon.  He  retains  only  its 
fundamental  principles. ^'^ 

It  must  have  been  observed  by  all  educators  that  the 
development  of  the  mind  proceeds  at  a  fairly  equal  pace 
in  all  classes  of  individuals.  Our  system  of  graded  schools 
could  not  exist  were  this  not  so.  The  difference  between 
individual  intellects  lies  chiefly  in  the  age  and  distance 
which  they  can  traverse  before  they  cease  all  progress  and 
drop  out  of  line.  Some  do  well  up  to  the  fourth  grade 
of  common  school  and  then  fail.  They  do  not  spend  the 
same  time  in  traversing  this  ground  which  the  brilliant 
pupil  does  in  completing  his  education,  which  finishes,  say, 
with  a  Ph.D.  Up  to  the  fourth  grade  the  two  proceed 
fairly  side  by  side;  but  there  one  stops  and  the  other  goes 
on.  Some  reach  the  high  school,  but  never  enter.  Sorne 
complete  the  high  school  course  before  they  "  find  their 
number  "  for  life  and  settle  down  upon  it.  All  through 
the  college-course  this  sifting  goes  on,  weeding  out  those 
who  can  go  so  far  but  no  farther.  Only  a  respectable 
minority  find  profit  in  a  post-graduate  course. 

What  then?  Time  nor  life  stops  when  the  last  degree 
Is  earned.  Is  not  the  picture  of  life  to  be  drawn  upon  the 
same  lines?  Are  there  not  some  who  give  brilliant  prom- 
ise at  twenty  or  twenty-five  who  at  thirty  have  attained 

17  Repeatedly  I  have  had  alumni  tell  me:  "Your  course  is  strangely 
lacking.  Now  I,  as  an  employer,  am  seeking  all  the  time  men  who  can  do 
so  and  so.  Why  do  you  not  put  this  training  into  your  course?"  If  we 
did  we  should  be  turning  out  wooden  failures  of  men.  There  are  thou- 
sands of  these  employer-alumni,  each  with  his  particular  pet  task  in  mind, 
desirous  of  employing  automatons  out  of  whom  to  make  a  profit.  If  we 
trained  our  graduates  into  grist  fit  for  these  hoppers  they  would  be  fit  for 
a  score  of  such  mechanical  tasks  none  of  ivhieh  ivere  any  more  in  demand 
by  the  time  they  reached  responsible  years,  and  for  nothing  else;  while 
for  bold  and  effective  progress  of  their  own  into  fields  now  unknown,  but 
soon  to  be  in  demand,  they  would  have  been  utterly  incapacitated,  so  far  as 
we  had  been  able  to  influence  them. 


THE   COST   TO   THE    COMMUNITY  471 

their  zenith?  Some  go  on  a  few  years  further  and  still 
make  progress.  But  only  very,  very  few  there  are,  those 
who  leave  their  mark  upon  human  history,  who  continue 
beyond  this  point  and  in  the  fifth,  sixth  and  seventh  decades 
of  life  still  evince  the  ability  to  learn  and  to  teach, — who, 
like  the  grand  old  Gladstone,  can  lie  down,  in  their  ninth 
decade,  upon  their  last  bed  of  pain  with  the  prayer  of 
gratitude  for  the  privilege:  "  One  more  lesson,  Oh  Lord; 
one  more  lesson  to  be  learned  !  " 

Is  it  not,  then,  the  prime  and  the  sole  object  of  all  edu- 
cation to  lengthen  this  time  of  intellectual  progress  for 
each  man,  to  increase  the  average  longevity  of  the  intellect 
of  the  race,  just  as  it  is  the  aim  of  all  applied  biology  to 
lengthen  the  body's  span  of  years?  But  this  cannot  be 
done  by  multiplying  exercises.  This  can  only  be  done  by 
leading  each  youth  to  love  knowledge,  to  see  that  all  forms 
of  truth  are  one,  to  learn  equally  from  the  pages  of  his 
mathematics  and  from  the  eye-piece  of  his  microscope 
that  all  branches  of  science  are  but  the  study  of  different 
phases  of  a  single  Nature  and  that  all  phenomena  are  but 
the  manifestations,  upon  different  scales  and  speeds  of 
integration,  of  the  same  elemental  activities;  to  learn  that 
time  and  space  and  dimension  are  not,  and  yet  that  there 
exist  eternal,  indestructible  realities;  and  finally  to  have 
complete  faith  in  the  unity  of  God,  nature  and  man — 
to  the  end  that  his  mind  may  be  ever  free  from  bigotry 
and  prejudice  and  open  to  each  new  and  strange  form  of 
the  old  Truth.  This,  and  this  alone,  would  seem  to  be 
education.  "  Whether  1  teach  Greek  roots  or  Roman  law 
or  the  precession  of  the  equinoxes,"  said  one  of  my  revered 
teachers,  now  laid  away  to  rest,  "  I  teach  the  truth  of  life. 
I  remember  always  that  in  each  division  before  me  prob- 
ably sits  some  future  great  man,  and  I  teach  for  him.  The 
rest,  even  if  I  shoot  over  their  heads,  are  sure  to  gain  a 


472  THE    COST    OF    COMPETITION 

little  true  gold  and  to  have  missed  some  burden  of  dross 
which  they  otherwise  would  have  picked  up."  Before  a 
gathering  of  New  England  college-educators  an  official 
of  the  Pennsylvania  Railroad  is  reported  to  have  said: 
"  For  apprentices  in  our  Altoona  locomotive  shops  we  pre- 
fer the  graduates  of  the  academic  to  those  of  the  technical 
schools.  They  have  learned  the  Law  of  the  Conserva- 
tion of  Energy  and  the  humility  of  the  true  student,  which 
is  all  that  any  course  can  teach,  and  they  have  nothing  to 
unlearn." 

When  we  teach  for  the  sake  of  the  year  after  gradua- 
tion we  teach  things  of  ephemeral  value.  Let  us  who 
have  attained  to  years  of  responsibility  look  back  a  quar- 
ter-century and  ask  ourselves:  "Supposing  we  had  re- 
membrance of  every  atom  of  our  college-course,  how  much 
should  we  find  useful  to-day?  How  much  of  it  would  we 
not  find  a  heavy  burden  of  obsolete  method  and  absolute 
falsity  of  doctrine?"  These  things  we  educators  must 
remember  in  laying  out  our  present  work,  that  of  nine- 
tenths  of  what  we  so  carefully  teach  to-day  all  that  is  not 
forgotten  twenty  years  hence  will  be  in  ridicule.  The 
other  tenth  will  consist  neither  of  details  nor  of  applica- 
tions nor  of  methods.  It  will  consist  of  principles  so 
fundamental  as  to  form  a  part  of  all  thought  and  to  apply 
to  all  problems  of  application,  and  so  well  established  as 
not  to  be  shaken  by  future  discovery.  These  things  alone 
we  know  and  should  teach.  It  requires  a  very  short  class- 
room course  to  impart  them.  It  requires  more  than  the 
allotted  three-score-and-ten  of  years  to  grasp  and  utilize 
them  to  their  utmost. 

These  are  the  reasons  why  the  detriment  of  our  educa- 
tional standards  and  methods  is  one  of  the  heaviest  costs 
to  the  community  which  can  be  charged  against  the  com- 
petitive system.      For  the   competitive  system   is  wholly 


THE    COST   TO   THE    COMMUNITY         473 

to  blame  for  it.  There  is  no  natural  physiological 
tendency  in  man  to  otherwise  explain  its  presence.  It 
is  the  natural  result  of  the  artificial  pressure  upon 
employers  and  employees  alike,  to  make  of  every  man 
a  machine.  Each  hour's  effort  must  produce  enough  of 
value  so  that  seventy  per  cent,  can  be  deducted  for  cost 
of  barter  and  enough  be  left  to  feed  the  next  hour's  effort. 
And  so  the  college-student  of  the  technical  sort  (which 
promises  soon  to  be  all-inclusive)  is  carefully  trained  to 
earn.  He  is  not  educated;  he  Is  trained.  Each  thing 
which  he  may  be  called  upon  to  do  after  graduation,  each 
problem  which  can  be  foreseen,  he  must  practice  doing 
and  solving  in  undergraduate  days.  He  learns  by  rote, 
as  do  the  Chinese.  The  discipline  of  unaided  struggle 
with  abstract  problems,  earning  the  ability  to  think  alone, 
and  the  inspiration  of  the  study  of  fundamental  principles, 
earning  the  ability  to  see  clearly  a  path  ahead  when  to 
others  the  obstacles  are  rigid  and  opaque, — these  are  quite 
lacking.  As  the  years  of  after-life  pass  by,  so  far  as  the 
college-education  may  still  make  or  mar,  the  dull  product 
of  this  mechanical  training  must  still  sit  and  twirl  his 
thumbs.  In  the  obsolete  manner  taught  him  years  before, 
while  the  new  demands  of  the  new  times  are  dragging 
into  prominence  and  power  the  men  who  are  not  so 
wooden,  the  men  who  were  truly  taught,  In  college  or  out, 
and  who  awaited  their  education  In  wage-earning  applica- 
tions until  they  entered  the  wage-earning  world. 

Let  here  be  raised  In  solemn  warning,  then,  the  declara- 
tion that,  of  all  the  painful  tasks  of  reconstruction  which 
await  the  impending  overthrow  of  our  now  almost  obsolete 
commercial  system  and  the  clearing  of  the  ground  for 
better  things, — worse  than  the  reabsorptlon  of  the  mil- 
lionaires, the  razing  of  the  slums  and  skyscrapers  and  their 
replacement  with  the  less  grotesque  and  gruesome, — the 


474  THE    COST    OF    COMPETITION 

worst  is  to  be  the  slow  outgrowth,  requiring  more  than 
one  generation,  of  the  educational  faults  now  being 
branded  upon  the  youth  of  the  present  and  near  succeed- 
ing days. 

For  it  is  useless  to  place  before  us  Huxley's,  or  anyone 
else's,  statement  of  what  constitutes  an  ideally,  perfectly 
educated  man,  of  what  the  divine  image  looks  like,  unless 
we  are  at  the  same  time  told  why  we  do  not  now  attain  it. 
For  if  we  fail  of  it,  it  is  we  who  are  at  fault.  The  divine 
power  of  natural  growth,  animated  and  directed  by  the 
Supreme  Intelligence,  will  take  care  that  the  resultant 
image  is  of  the  proper  stamp,  if  we  but  permit  opportunity. 
If  it  come  out  marred  or  distorted  or  stunted,  let  us  look 
for  mistaken  strokes  on  our  part,  not  on  God's  or  nature's, 
not  for  original  sin  or  total  depravity.  To  abstain  from 
marring  the  pure  raw  material  intrusted  to  us,  the  child- 
hood of  which  is  the  kingdom  of  Heaven,  by  pressure,  by 
haste,  by  avarice  of  the  visible,  by  odious  comparison: 
this  is  the  proper  aim  of  all  education.  This  we  shall  have, 
in  kindergarten  and  university,  when,  and  not  before,  a 
price  is  no  longer  placed  upon  all  human  life  and  made 
variable  by  barter. 

The  Public  Libraries.  Closely  allied  with  the  pub- 
lic schools,  in  our  system  of  education,  are  the  public 
libraries.  They  exhibit  more  clearly  than  does  any  other 
instance  in  our  present  organization  the  natural  fountain 
of  pure  social  ethics  and  aesthetics,  the  true  and  natural 
relations  between  man,  his  work  and  the  state  which  spring 
up  promptly  when  barter  is  eliminated. 

Most  of  us  now  living  have  seen  the  gradual  extermina- 
tion of  the  private  library  as  the  repository  of  the  com- 
munity's printed  thought.  A  few  friends  in  boards  and 
cloth   each  of  us  still  keeps  by  him,   it  is  true;  but  the 


THE   COST   TO   THE   COMMUNITY         475 

reliance  of  the  community  to-day  for  its  reference  funds  of 
knowledge  is  the  large  public  library. 

To  these  libraries  men  contribute,  as  individuals,  what 
they  are  able.  Some  books, — most  of  them,  as  numbers 
go, — are  written  for  the  sake  of  cash.  How  worthless 
are  they  to  the  community !  They  are  its  literary  burden. 
As  for  those  of  Miss  Alcott,  written  to  shingle  the  barn, 
and  Sir  Walter's  later  volumes,  indeed,  they  are  not  to  be 
burned  with  the  rest;  genius  is  behind  them, — prostituted, 
because  of  competition,  to  shingling  barns.  But  they  are 
the  exceptional  few.  Burning  is  too  good  for  most  of  the 
others.  Of  all  of  those  which  stand  as  permanent  con- 
tributions to  human  possessions  of  real  knowledge,  every 
one  was  gotten  out  without  regard  to  pecuniary  considera- 
tions, and  usually  in  defiance  of  them.  Did  some  of  them 
bring  in  money?  If  they  had  not  they  would  still  have 
existed.  Most  of  them  brought  in  poverty  and  scorn; 
some  of  them  the  stake. 

How  they  have  increased  in  numbers,  too !  The  books 
formally  enrolled  in  public  libraries  have  multiplied  by 
five  hundred  per  cent,  in  less  than  thirty  years.  Is  this  a 
sign  that  public  organization  kills  initiative?  Has  any 
other  institution  of  equal  importance,  but  privately  organ- 
ized for  profit-making,  any  better  record  for  prog- 
ress? The  writing  of  the  books  was  largely  for  profit's 
sake,  and  so,  as  literature,  they  are  many  of  them  worth- 
less. But  the  zealous  gathering  of  them,  upon  the  library- 
shelves,  where  all  might  have  access  to  them  with  the 
greatest  ease,  the  industrious  expansion  of  facilities  for 
the  public  use  of  them,  the  uniform  courtesy  of  the  attend- 
ance,— all  of  these  are  the  direct  result  of  the  public  organ- 
ization of  the  libraries  and  their  operation  without  the 
most  remote  idea  of  personal  profit  or  corporate  dividends. 

From  these  libraries  men  draw  what  they  can.     The 


476  THE    COST   OF   COMPETITION 

only  restriction  upon  the  utilization  of  their  treasures  is 
the  ability  of  the  individual  to  absorb.  They  are  quite 
free  from  charges,  onerous  or  otherwise.  Do  we  find  rife, 
therefore,  a  natural  disposition  to  steal  the  books?  Prac- 
tically none.  There  is  no  incentive;  naught  is  to  be 
gained  in  that  way  when  everything  is  so  free.  Men  steal 
only  what  they  are  forbidden  to  enjoy. 

The  existence  of  the  public  accumulation  of  all  knowl- 
edge is  infinitely  more  comfortable  and  useful  to  the  indi- 
vidual than  is  any  fractional  hoard  which  he  can  possibly 
amass,  care  for  and  defend.  We  shall  some  day  see  that 
this  is  also  true  of  a  public  accumulation  of  any  enjoyable 
thing:  not  of  money,  for  money  is  not  an  enjoyable  thing, 
only  a  tool  for  measuring  transactions,  already  largely 
replaced  by  mere  written  records;  but  of  houses  and  land, 
food  and  clothing,  transportation  and  fine  art,  in  repre- 
senting which  money  first  assumes  any  value  whatever.  In 
the  past  development  of  society,  as  the  neglected  pathway 
of  barbarous  times  became  the  modern  boulevard,  requir- 
ing underground  construction,  paving,  sweeping  and  light- 
ing, has  the  tendency  developed  on  the  part  of  individuals 
to  walk  upon  it  more  than  is  wise  in  order  to  draw  to 
themselves  its  value  away  from  others?  To  the  extent 
that  they  utilize  it  do  they  not  contribute  value  to  the  com- 
munity not  abstract  it:  just  as  men  do  in  utilizing  a  library? 
Only  franchise  to  tax  the  public  tempts  man  to  monopo- 
lize the  public  streets. 

Incidentally  they  wear  out  the  books  or  the  boulevard  in 
the  using,  of  course.  Is  not  the  cost  of  maintenance  in- 
significant, in  comparison  with  the  gain  due  to  the  free- 
dom of  use?  Is  it  not  infinitely  cheaper  to  charge  it  up 
to  a  single  account,  distributing  the  cost  uniformly  to  all, 
without  regard  to  what  they  give  or  what  they  get,  from 
either  library  or  boulevard,  than  it  is  to  try  to  measure 


THE   COST  TO   THE   COMMUNITY         477 

out,  charge  up,  bill  out  and  collect  each  man's  debit  and 
credit?  Have  not  the  privately  owned  library  and  the 
county  toll-road  disappeared  most  naturally  together? 

If  the  street  cars  were  operated  upon  the  same  principle 
as  the  rest  of  the  avenue,  and  the  house-lights  the  same  as 
the  street  lights,  would  robbery  ensue?  Would  people 
take  the  time  to  ride  needlessly  in  order  to  defraud  the 
community?  They  would  soon  tire,  or  the  fresh  air  would 
clear  their  brains.  Could  they  defraud  it?  They  might 
give  cost  to  the  community,  but  they  could  carry  home 
with  them  nothing  of  value  to  themselves,  except  expanded 
lungs  and  memories  of  field  and  sky,  worth  infinitely  more 
to  the  community  than  the  cost  of  the  two-cent  car-ride. 
Would  people  be  tempted  to  sit  up  o'  nights  in  order  to 
waste  light?  What  could  they  gain  thereby? — except 
temptation  to  read  or  to  think,  of  inestimable  value  to  the 
community. 

When  will  the  simple  old  distinction  of  Proudhomme 
be  understood?  That  "property  is  robbery  and  posses- 
sion liberty  " ;  that  when  the  use  and  enjoyment  of  a  thing 
is  assured  to  one  the  very  selfishness  which  before  de- 
manded ownership  now  urges  one  to  avoid  ownership. 
To-day  men  ruin  our  government  and  themselves  in  their 
fight  over  street-railway  and  lighting  properties,  giving 
millions  for  the  privileges, — because  there  are  profits  arti- 
ficially and  unnecessarily  attached  thereto.  Were  the 
work  of  furnishing  illumination  all  done  at  the  gas-works, 
by  labor  and  superintendence,  with  wheelbarrows  and 
pokers,  amidst  heat  and  soot,  and  not  at  all  at  the  down- 
town offices, — with  no  profits,  no  stock  nor  bonds,  no 
dividends,  no  share-holders,  no  presidents  and  treasurers 
attached,  like  the  post-office, — would  there  be  such  a 
struggle  on  the  part  of  the  silk-hats  to  get  in?  Would 
ten  dollars  a  day,  or  ten  times  ten,  hire  them  to  enter? 


478  THE    COST    OF   COMPETITION 

It  is  all  of  these  factors  which  must  be  remembered  in 
trying  to  compare  bargaining  with  cooperation,  and  their 
comparative  ethical  results.  The  library  reveals  them  all 
clearly  because  it  comes  only  slightly  into  contact  with 
money-making.  The  cheaper  publishers  attempt  to  foist 
upon  librarians  books  unworthy  of  admittance,  it  is  true; 
but  the  latter  are  professional  men,  upon  salaries  from  the 
people,  and  are  in  no  wise  dependent  upon  the  publishers : 
as  the  post-office  authorities  are,  for  instance,  upon  the 
great  money-making  corporations  which  corrupt  them. 
The  post-office  cannot  conduct  its  daily  work  without 
rehance  upon  and  contracts  with  profit-seeking  railroad, 
steamship  and  supply  companies.  It  is  in  these  relations 
that  all  the  scandal  arises.  But  within  the  library,  because 
the  use  of  the  books  is  not  sold  at  a  price,  there  can  be  no 
profits  made.  Dishonesty  on  the  part  of  librarians  or 
assistants  can  avail  nothing.  It  is  the  one  public  service 
which  supplies  individual  citizens  which  is  operated  solely 
for  the  sake  of  the  service,  no  money  being  handled. 
Therefore  the  service  is  good;  the  books  are  good;  the 
intangible  gain  to  the  community  is  unquestionably  many 
times  its  cost.  It  is  the  one  most  important  service  to  the 
community,  after  the  necessaries  of  life  and  transportation 
and  communication  are  attended  to;  yet  it  figures  very 
little  in  cost  of  maintenance  and  not  at  all  in  "  vested 
interests,"  listed  securities,  dividends  or  coupons;  in  its 
"  promotion,"  its  financing,  its  advertising,  its  "  estab- 
lished trade."  Its  patrons  seek  it,  as  alone  is  natural, 
not  it  its  patrons. 

Journalism,  Fiction,  and  the  Stage.  There  is  yet 
one  other  item  of  community-life  which  must  be  briefly 
referred  to  here,  as  throwing  bright  light  upon  the  ethical 
effects  of  competition,  because  it  suffers  so  palpably  from 


THE    COST   TO   THE    COMMUNITY         479 

them.  This  Is  journalism.  The  same  forces  are  at  work 
In  the  creation  of  the  present  flood  of  cheap  romantic 
fiction  and  of  the  Intellectual  degeneration  of  the  stage 
as  in  the  rise  of  yellow  journalism,  It  Is  true;  but  journal- 
ism exhibits  them  the  most  clearly.  It  will  be  discussed 
alone,  in  Illustration  of  the  others. 

Journalism  presents  a  peculiar  combination  of  the  pro- 
fessional and  the  commercial.  Its  leaders  are  drawn 
from  the  very  first  walks  of  life.  College-bred,  well 
read,  cultivating  at  every  step  breadth  and  charity  of 
view:  as  Individuals  they  are  able  and  by  taste  they  are 
inclined  to  furnish  us  with  a  compote  of  daily  news  which 
Is  really  an  inspiration,  drawn  from  the  best  current 
doings  of  the  entire  world.     But  they  do  not  do  it. 

The  degeneration  of  the  newspaper  arises  from  a  single 
corrupting  force :  profit-seeking.  This  operates  detri- 
mentally both  from  within  and  from  without,  but  espe- 
cially from  without. 

In  the  first  place,  each  sheet  experiences  horizontal 
competition  with  its  neighbors,  against  which  it  must 
strive  for  life.  It  must  maintain  its  circulation  or  lose 
its  existence,  and  with  it  its  least  power  for  good.  In 
this  It  suffers  In  common  with  all  professional  attempts 
at  the  attainment  of  high  standards  of  art.  Turn,  for 
instance,  to  the  man  who  wrote  too  well  to  be  a  journalist: 
Kipling.  In  his  "  Light  that  Failed  "  he  has  Dick 
preach  a  sermon  to  Maisie,  to  the  effect  that  good  work 
can  only  be  done  while  one  Is  unconscious  of  self  and  of 
success.  But  the  competitive  system  forces  every  striver 
in  artistic  lines  to  have  one  eye  cocked  always  for  success, 
since  only  by  success  can  he  live.  He  is  not  awarded  an 
Income  by  the  art-loving  public  according  to  the  quality 
of  his  work;  he  must  abandon  quality  in  order  to  produce 
quantity.      He  must  appeal  to  the  greatest  numbers;  for 


48o  THE    COST   OF   COMPETITION 

his  managers,  operating  commercially,  choose  their  pro- 
grammes solely  according  to  the  audience  which  they  will 
gather,  to  the  profits  which  they  will  return.  No  atten- 
tion is  paid  to  an  auditor's  taste;  It  may  be  good  or  atro- 
cious; if  he  has  a  dollar  ready  to  pay,  that  settles  the 
question;  he  shall  be  served  with  what  he  prefers.  So 
the  artist  must  play  to  the  galleries,  because  the  galleries, 
thumbs  up  or  thumbs  down,  declare  literally  whether  he 
shall  feed  or  starve,  live  or  die.  Mr.  Kipling  wrote  this 
book  in  the  hope  of  combating  self-conscious  effort. 
But  the  entire  volume,  outside  the  sermons,  voices  the  prev- 
alence of  forces  to  the  contrary  which  are  infinitely  more 
powerful  than  exhortation:  the  enforced  struggle  for 
comparative  recognition.  Dick's  life  speaks  it.  Mr. 
Kipling's  does  the  same:  for  to  the  present  writer  his 
sentence  to  oblivion,  for  a  time  at  least,  was  written  by 
Kipling  himself,  in  a  review  of  one  of  Mr.  Bullen's  sea- 
tales,  in  a  remark  to  the  effect  that  "  the  material  pre- 
sented was  sufficient  to  have  made  five  books."  When 
the  prostitution  of  literature  to  the  manufacture  of  books 
comes  in,  the  inspiration  being  measured  in  terms  of  the 
amount  of  copy  it  will  produce,  the  man's  fate  is  sealed. 
Out  of  the  ashes  of  the  murdered  muse,  if  the  writer  learns 
and  repents,  may  arise  the  incarnation  of  a  new  one;  other- 
wise his  art  and  his  fame  are  dead  forever. 

This  is  what  is  the  matter  with  journalism.  The  muse 
is  not,  indeed.  Impaled  upon  the  copy-hook.  Space  is 
usually  In  demand  more  than  copy.  But  she  is  outraged 
by  the  scareheads  and  the  sensational  and  sporting  news 
which  Is  relied  upon  to  catch  the  taste  of  the  public  major- 
ity; for  no  regard  is  paid  to  the  quality  of  the  clientele. 
The  two  cents  of  the  newsboy  is  as  good  as  that  of  the 
Academician.  And  as  the  lowest  tastes  and  tendencies 
are  the  ones  which  open  the  pockets  most  promptly  upon 


THE    COST   TO   THE   COMMUNITY         481 

excitation,  those  are  the  ones. to  which  constant  appeal  is 
made.  The  more  sensational  the  matter  the  greater  the 
profits.  Only  the  extremity  of  public  opinion  and  the  law 
bars  out  sheer  obscenity. 

To  the  character  of  this  audience  of  journalism  further 
reference  will  be  made  a  little  later.  In  the  meantime 
it  is  desirable  to  point  out  that  the  forces  on  the  inside, 
in  journalism,  are  worse  yet.  There  are  very  few  sheets 
which  maintain  their  circulation  by  either  the  high  literary 
quality  of  their  editorials  or  even  by  the  literary  taste  with 
which  the  paper  is  put  together.  Circulation  is  not 
directly  the  mainstay  of  existence.  The  daily  paper  lives 
upon  its  advertising.  Circulation  enhances  the  value  of  the 
advertising-space,  of  course;  but  the  latter  is  worthless 
unless  utilized.  It  must  be  kept  filled  against  all  the  com- 
petition of  the  other  local  papers. 

The  order  of  importance  of  the  different  sorts  of  self- 
sustaining  effort  in  journalism,  therefore,  may  be  stated 
as  follows : 

( 1 )  To  secure  advertising  matter; 

(2)  To  secure  circulation,  in  aid  of  the  former; 

(3)  To  publish  the  news  of  real  importance; 

(4)  To  publish  the  best  possible  editorial  review  of 
the  day's  events. 

Note,  in  the  first  place,  the  order  of  importance.  No 
desire  or  aspiration  in  (3)  or  (4)  may  find  expression  if 
it  antagonizes  either  of  the  preceding  aims.  No  news 
must  be  printed,  no  editorial  attitude  taken,  which  may 
offend  large  advertisers  or  large  bodies  of  subscribers.  The 
news  and  its  manner  of  presentation,  in  scareheads  and 
sensational  contents,  must  be  debased  to  the  task  of  secur- 
ing circulation;  the  editorials  to  that  of  currying  favor. 
Our  journals  have  exactly  the  same  problem  of  intellectual 
independence   invaded  by  need   of  pecuniary  endowment 


482  THE   COST   OF   COMPETITION 

which  threatens  the  proper  usefulness  of  our  universities, 
our  theatres,  and  our  churches. 

In  such  negative  fashion  does  the  competitive  system 
inspire  man's  highest  literary  afforts !  Is  this  the  honored 
Muse,  triumphant,  in  a  wagon  hitched  to  a  star?  Is  not 
rather  the  rider  before  the  cart,  the  Muse  harnessed  as  a 
draft-animal,  with  blinders,  that  she  may  not  see  how 
unhappy  is  her  own  plight;  and  in  the  wagon  behind  the 
blinders  a  very  mundane  burden :  a  golden  calf,  heavy  and 
uninspiring? 

Taking  up  the  numbered  list  seriatim,  effort  in  the  first 
direction  is  purely  commercial  in  its  nature:  unalloyed  bar- 
ter, the  acquisition  of  influence  over  men. 

Effort  in  the  second  direction  is  the  same;  but  it  mas- 
querades very  successfully  as  reportorial  work.  It  con- 
sists in  publishing  spicy  reports  of  sensational  local  inci- 
dents, in  embellishing  them  with  the  most  startling  of 
scareheads.  No  man  of  literary  taste  would  ever  think 
of  presenting  facts  in  such  a  manner  except  for  hire.  Yet 
it  gets  to  be  an  unconscious  habit.  For  instance,  a  local 
sheet  furnishes  these  headlines: 

"AGED    LADY    DEAD." 

"  Was  One  of  M — • — bury's  well  known  Residents." 
"STENCH    SOMETHING   AWFUL." 

To  be  sure,  in  this  case  the  sensational  becomes  prominent 
from  an  unfortunate  juxtaposition  of  the  news  of  the 
death  of  an  estimable  citizen  and  that  of  a  break  in  the 
town-sewer;  but  its  unconsciousness  illustrates  the  care- 
fully cultivated  tendency  to  shout  out  something  terse, 
coarse  and  incisive,  as  the  newsmonger's  first  duty,  better 
than  would  a  more  deliberate  offense.  It  typifies  the 
explanation  of  why  it  is  that,  in  a  million  cases,  our  better 


THE    COST   TO   THE    COMMUNITY         483 

taste  is  jostled  and  jarred  by  the  coarse  and  incongruous. 
It  makes  plain  why  it  is  that  even  in  the  journals  furthest 
removed  from  the  "  yellow,"  there  is  no  effort,  made  or 
pretended  even,  to  give  news  prominence  in  proportion  to 
its  real  importance.  It  is  displayed  with  sole  regard  to  its 
probable  influence  over  the  purchasers  of  the  paper.  In  this 
it  addresses  the  millions.  With  them  it  appeals  to  the 
impulses  which  most  promptly  open  the  pocket :  to  a  sharp 
little  stir  of  the  baser  passions.  If  it  possesses  an  audi- 
ence already  cultivated,  by  other  forces,  into  response  to 
appeals  to  the  mind  or  the  heart,  it  also  pays  to  somewhat 
excite  the  populace  in  these  directions;  but  there  is  always 
more  profit  in  the  cultivation  of  the  baser  side  of  life.  In 
any  event,  the  dependence  upon  profit  for  existence  forces 
the  press  to  be  a  servile  follower  of  public  taste  and 
opinion,  instead  of  the  leader  which  it  ought  to  be.  It 
cares  not  at  all  for  the  individual  opinions  and  consciences 
of  its  editoral  staff.  It  cares  very  little  for  the  patronage 
of  the  minority  of  the  community  of  superior  intelligence 
and  taste,  who  would  pay  a  much  higher  price  for  a  reli- 
able, impartial  sheet  devoted  solely  to  the  most  important 
news  and  to  editorial  review;  for  to  cater  to  them  would 
be  to  lose  the  much  larger  volume  of  low-price  trade;  and 
volume  of  circulation,  not  quality,  is  what  gives  value  to 
the  advertising-space. 

The  circulation  of  the  daily  press  depends  upon  the 
skill  with  which  it  plays,  as  upon  a  harp  with  a  single 
monotonous  and  defective  string,  upon  a  certain  weak 
tendency  of  the  times,  a  tendency  which  reveals  how  insidi- 
ous and  universal  are  the  evil  effects  of  competition  upon 
our  national  tastes  and  actions.  This  tendency  deserves 
especial  attention. 

The  competitive  system  leads  to  overexertion  upon  the 
part  of  all,  high  or  low,  except  a  few  whose  incomes  are 


484  THE    COST    OF    COMPETITION 

drawn  from  inherited  accumulations.  The  only  limit  to 
the  exertions  of  either  the  business  or  the  laboring  man  is 
his  inability  to  do  more.  Either  exhaustion  or  overten- 
sion  of  the  nervous  system  are  the  American  trade- 
marks. 

The  recreation  of  an  organism  in  such  a  condition  as 
that  must  always  consist  of  a  distraction  of  some  sort.  If 
the  nerves  are  worn  out  by  extreme  effort  in  one  direction 
they  must  receive  artificial  stimulation  before  pleasure  can 
ensue  from  activity  in  another.  If  they  have  been 
wrought  into  intensity  in  one  line  of  work,  although  there 
may  be  no  consciousness  of  fatigue  or  exhaustion,  only 
sharp  sensations  will  avail  to  draw  them  off  from  their 
fixation  upon  work  into  fixation  upon  anything  else. 

For  instance,  there  has  been  no  time  in  the  history  of 
France  when  the  theaters  of  Paris  were  better  patronized 
than  during  the  Reign  of  Terror.  At  a  time  when  super- 
ficial reasoning  would  predict  gloom  as  enshrouding  the 
entire  city,  preventing  all  relaxation  in  amusement,  a 
knowledge  of  the  law  of  equilibrium  in  biology  regards 
the  feverish  gayety  of  such  a  time  as  only  natural.  It  is 
inevitable  that  we  must  play  as  we  work.  Not  only  must 
we  have  as  much  of  the  one  as  we  do  of  the  other,  but  it 
must  be  of  the  same  sort:  the  natural  recreation  will  be 
strenuous,  exciting  and  exhausting,  or  calm  and  elevating, 
entirely  according  to  the  character  of  the  work  prescribed. 
President  Roosevelt  advises  strenuous  play  that  the  work 
may  be  strenuous.  Right,  if  strenuosity  is  the  most  desir- 
able life.  But  there  is  such  a  thing  as  inefficiency  from 
overexertion.  It  is  at  present  the  curse  of  this  country; 
for  it  inevitably  begets  three  things: 

(i)  Error  due  to  lack  of  deliberate  and  penetrative 
reflection,  whereby  less  is  accomplished  than 
otherwise  might  be  done  with  less  exertion; 


THE    COST   TO   THE    COMMUNITY         485 

(2)  The  natural  reaction,  In  the  second  generation,  to 

the  opposite  extreme:  unconquerable  laziness; 

(3)  The  need  for  overintensity  of  recreation,  which 

is  the  prime  instigator  to  all  vice  and  crime. 

It  is  these  secondary  effects  of  the  overexertion  coerced 
by  barter  which  have  indelibly  stamped  upon  the  present 
generation  its  tastes  in  literature,  daily  or  otherwise.  It 
is  the  short  story,  briskly  told,  or  the  sensational  novel, 
which  stand  supreme  in  book-work.  It  is  the  picture,  as 
spicy  as  possible,  which  makes  the  periodical.  It  is  the 
"  scarehead "  and  the  brevity  and  incisiveness  of  the 
reportorial  work  which  wins  circulation  for  the  daily 
journal.  It  is  the  play  of  sharp  wit  and  questionable 
morals,  spectacularly  staged,  the  comic  opera  padded  with 
horse-play  or  the  variety  of  the  vaudeville  programme 
which  "  takes."  Those  who  run  as  they  read  do  not  pre- 
tend to  digest  or  reflect.  They  do  not  even  care  to  absorb. 
"  In  one  ear  and  out  the  other  "  is  the  motto  of  the  news- 
paper-reader. 

Ninety-five  per  cent,  of  the  reading  done  of  daily 
journals  is  of  the  same  hideous  sort  of  debauchery  of  the 
mind  that  the  degenerate  Romans  used  to  exercise  with 
the  stomach:  gluttony  relieved  by  artificial,  unnatural 
rejection,  and  carried  on  from  the  lowest  of  motives:  the 
overtitilation  of  sensory  nerves  finally  become  too  tired 
to  respond  to  ordinary  wholesome  excitation.  Only  let 
the  matter  be  graphic  and  sensational  enough  to  arrest 
and  divert  the  weary  attention  for  a  moment  from  the 
grim  demands  of  the  daily  struggle !  Only  let  it  not  be 
a  thing  to  stay  by  one,  demanding  serious  consideration, 
effort  at  understanding,  digestion,  reflection,  offering  its 
addition  to  life's  accumulation  of  wisdom!  For  there  is 
no  time  nor  strength  for  such  things  in  the  competitive 
campaign.     He   who   preserves   them   must   give   up    all 


486  THE    COST    OF    COMPETITION 

economic  hope  and  drop  resignedly  into  the  ranks  of  the 
unpaid:  the  laborers,  the  scholars  and  the  artists. 

It  is  to  such  an  audience  as  this  that  journalism  neces- 
sarily caters  to-day  and  by  the  verdict  of  which  it  lives  or 
dies.  The  survival  of  the  sensational  is  inevitable.  To 
contemn  the  "  yellow  "  journals  from  a  platform  of  supe- 
rior morality  is  at  once  specious,  futile  and  hypocritical. 
They  are  not  only  doing  just  what  every  other  business- 
man in  the  country  is  doing:  seeking  trade,  without  too 
fine  a  question  as  to  the  nature  of  the  means  or  of  the 
incidental  results,  but  they  are  doing  it  because  he  is  doing 
it.  They  cannot  possibly  stop ;  they  must  inevitably  get 
worse  and  worse,  until  he  stops.  So  let  him  who  has  not 
sinned  to  the  extent  of  seeking  trade  and  profit,  in  ways 
not  lending  to  the  glory  and  improvement  of  his  native 
land,  cast  at  fallen  journalism  the  first  stone.  When  he 
has  purified  himself  he  will  find,  mirahile  dictu,  that  her 
garments  are  already  clean. 

Let  barter  be  but  abolished  and  journalism  will  rise 
from  its  present  bed  of  mud  as  a  whitened  angel.  Of 
advertising  there  will  be  no  more.  Bulletins  there  will 
be,  in  plenty,  but  not  often  of  prices;  only  of  real  novelties 
on  the  market.  Fruits  may  change  their  prices  once  a 
week,  fish  and  meat  once  a  season;  the  rest  of  the  staples 
will  alter  their  prices  so  seldom  that,  there  being  then 
no  longer  any  question  of  where  to  buy,  there  being  only 
one  dealer  and  one  price,  the  question  of  prices,  even  after 
the  pattern  of  present  market-reports,  will  be  unknown  as 
news;  they  would  probably  occupy  separate  bulletin-sheets. 

The  newspaper  will  then  consist  of  just  two  things :  ( i ) 
The  report  of  things  done;  (2)  the  expression  of  editorial 
opinion  in  review  of  current  events.  Neither  will  be  done 
with  a  view  to  curry  favor  with  the  multitude;  they  will 
be  guided  solely  by  the  conscience  and  good  taste  of  the 


THE    COST   TO   THE    COMMUNITY  487 

writer.  The  Income  of  editor  and  reporter  will  be  as 
assured  as  is  that  of  the  press-foreman  to-day:  liable  to  be 
lost  at  any  time  for  poor  work,  but  not  consulting  the 
rabble  as  to  what  constitutes  poor  work.  As  the  press- 
foreman  to-day  receives  his  appointement  at  the  hands  of 
a  circle  of  gentlemen  who  have  proven  their  competence 
to  judge  his  work,  so  the  journalist  of  the  future  will  be 
accountable  only  to  the  highest  literary  lights  of  the  coun- 
try in  his  search  after  fame  and  success.  Of  them  he  will 
be  one.  He  will  be  on  continuous  trial  by  his  peers.  As 
to  his  fate  the  people  who  enjoy  reading  only  of  prize- 
fights and  divorce-trials  shall  have  not  one  word  to  say. 

This  is  not  an  outline  of  a  thing  which,  it  is  hoped,  may 
be  enforced.  It  is  the  only  thing  which  can  possibly  come 
to  pass  if  barter  be  once  eliminated  from  Industry. 

Art  and  Aesthetics 

It  is  one  of  the  unfortunate  results  of  the  prevalence  of 
competition  that  there  is  very  little  else  with  which  to 
compare  it.  Just  as  in  economics  the  services  carried  on 
cooperatively  are  few  and  small,  so,  in  the  department  of 
the  fine  arts,  the  existing  instances  of  expression  of  taste 
which  can  be  regarded  as  representing  the  community  are 
comparatively  few.  In  fact,  outside  of  defense,  sanita- 
tion and  the  supply  of  material  commodities,  we  have 
almost  no  community-life.  The  body  politic,  as  an  entity, 
Is  as  yet  in  its  savage  state,  concerned  chiefly  with  war  and 
food-supplies;  giving,  as  an  organized  unit,  almost  no 
care  to  education  and  the  fine  arts.  This  is  where  many 
European  states  which  are  far  behind  us  in  political  or 
economic  organization  surpass  us  to  a  marked  degree. 
It  has  been  shown  how  the  community  is  affected  by  bar- 
ter in  several  lines  which  border  closely  upon,  if  they  not 
appreciably   enter,   the   field  of  pure   aesthetics.      But   in 


THE    COST   OF   COMPETITION 

none  of  these  particular  lines  is  there  any  real  community- 
action;  all  is  organized  upon  the  commercial  basis. 

The  lines  in  which  the  community  itself  attains  oppor- 
tunity for  the  expression  of  standards  of  taste  are  four  in 
number  only:  Architecture,  landscape-gardening,  prelim- 
inary education  and  the  library.  There  is  enough  evi- 
dence, however,  within  these  limited  fields  to  establish 
plainly  one  broad  rule  of  aesthetics : 

All  that  is  beautiful  in  our  community-life  can  be 
traced  directly  to  cooperation,  all  that  is  hideous  to  barter. 

In  discussing  this  proposition  extreme  care  must  be  taken 
to  correctly  identify  the  cause  and  the  effect.  To  throw 
light  upon  the  study  in  hand  it  must  be  certain,  in  every 
instance,  that  economic,  not  ethical,  forces  produced  the 
aesthetic  result  in  question.  For  instance,  suppose  that 
a  man  accumulates  a  fortune  in  establishing  a  great  busi- 
ness, in  the  usual  way.  This  he  bequeathes  to  his  son, 
who  is  also  able  and  who  continues  the  prosperity  of  his 
patrimony.  Suppose  that  the  grandson,  in  consequence, 
grows  up  in  comfort,  with  a  proper  degree  of  freedom  and 
responsibility  to  develop  character  and  enough  of  luxury 
to  develop  taste.  Suppose  that  he  traverses  college  as 
most  boys  do,  drops  into  a  place  prepared  for  him  in  his 
father's  business,  leads  a  quiet,  useful  life  and  at  sixty  pre- 
sents to  the  community  a  beautiful  park,  tastefully  laid 
out,  a  public  building  of  inspiring  outline,  a  new  school 
nobly  planned  or  a  skillfully  selected  library.  What  is 
there  here  of  cause  and  effect  between  economics  and  public 
aesthetics?  Nothing  at  all.  Do  you  insist  that  eco- 
nomics enter  as  a  cause?  Then  include  in  the  analysis  of 
how  he  acquired  his  leisure  the  travail  of  the  visible  hun- 
dreds and  the  invisible  thousands  which  his  leisure  has 
cost?  What  destruction  of  taste  has  there  been  there? 
Do  you   insist  that  aesthetics  appear  as  an   effect?     All 


THE   COST   TO   THE   COMMUNITY         489 

the  world  knows,  and  long  has  known,  that  the  first  essen- 
tial to  the  growth  of  taste  is  leisure.  To  further  under- 
stand why  this  is  so  is  a  problem  in  physiological  psychol- 
ogy, or  in  the  evolution  of  the  human  body,  not  of 
sociology  or  the  evolution  of  the  human  community. 

The  value  of  leisure  for  human  progress  has  for  centu- 
ries stood  as  the  excuse  for  the  earliest  political  slavery. 
How  the  first  steps  out  of  savagery  into  civilization  might 
have  been  made  for  the  few  without  the  slavery  of  the 
many,  we  cannot  well  say.  That  is  the  way  they  actually 
were  made,  and  we  can  imagine  no  other.  But  by  the  twen- 
tieth century,  or  even  by  the  middle  of  the  nineteenth,  this 
excuse  had  grown  too  old.  The  cost  to  the  many  of  that 
method  of  securing  the  leisure  of  the  few  had  grown,  in 
our  Southern  States,  at  least,  too  great  for  tolerance.  It 
was  demanded  that  the  many,  the  all,  have,  if  not  leisure, 
at  least  the  freedom  to  acquire  it.  The  demand  was  ridi- 
culed, resented,  resisted,  at  cost  of  all  leisure  and  peace  to 
millions;  but  it  was  granted. 

The  queer  thing  about  this  topic  is  the  widespread 
confusion  of  mind  between  the  necessity  of  leisure  as  a 
preessential  to  cultivation  and  the  supposed  necessity  for 
the  oppression  of  the  many  as  a  means  to  that  leisure; 
although  this  oppression  was  merely  an  incidental  price 
paid  for  the  leisure  of  the  few  because  no  one  then  knew 
how  else  to  obtain  it.  That  the  few  must  have  leisure  in 
order  to  be  aristocratic  is  vehemently  supported  by  those 
few.  That  the  masses  would  be  equally  cultivated  if  they 
possessed  equal  leisure,  that  they  never  can  become  culti- 
vated until  they  do  possess  leisure,  is  just  as  vehemently 
denied. 

Now,  in  the  twentieth  century,  we  are  witnessing  a 
culmination  in  the  history  of  barter  quite  similar  to  that 
of  the  nineteenth  century  in  the  history  of  slavery.     That 


490  THE    COST   OF   COMPETITION 

barter  has  always  led  to  the  leisure  of  the  few,  and  hence 
to  their  better  development,  within  certain  limits,  it  were 
absurd  to  deny.  But  the  plan  has  been  outgrown.  It  not 
only  now  costs  too  much  to  too  many,  but  it  permits  a  too 
mediocre  development  to  the  favored  few.  That  these 
last  are  now  lagging  further  and  further  behind  the  ac- 
tual progress  of  the  arts  and  sciences  in  the  hands  of  the 
higher  wage-earners,  even  hampered  as  they  are  by  their 
$2000-starvation-wage,  has  already  been  pointed  out. 
The  fact  that  an  occasional  rich  man  overcomes  or  evades 
his  disadvantages  and  becomes  cultivated,  in  spite  of  the 
processes  which  gathered  his  cash,  is  nothing  relevant 
whatever.  How  far  both  rich  and  poor  are  behind  what 
they  might  be  in  these  matters  it  is  the  province  of  these 
pages  to  dimly  suggest. 

Architecture  and    the    Streets    and    Parks.     Here 

the  comparison  between  public  and  private  taste  is  almost 
that  between  something  and  nothing.  Our  public  build- 
ings alone  of  all  others  possess  anything  worthy  of  the 
name  of  architecture,  any  elevation  of  outline,  any  techni- 
cal propriety  of  detail.  The  only  other  buildings  offering 
any  approach  to  the  artistic  are  the  dwelling-houses  of  that 
minority  of  the  rich  minority  who  have  sense  enough  to 
really  live  in  the  country.  No  city-house  can  possibly  be 
beautiful;  it  has  no  room  to  be.  No  temporary  summer 
home  can  offer  the  highest  beauty;  it  lacks  the  spirit  of 
the  Penates.  As  for  the  dwelling-houses  of  the  really 
poor,  in  city  or  country,  the  less  said  the  better.  The 
dwellings  of  the  middle  class  of  wage  and  salary-earners, 
in  communities  of  moderate  size :  the  modest  frame  and 
plain  brick  houses  occupying  the  quieter  streets  of  small 
towns,  constitute  what  is  really  our  only  typical  American 
architecture.  They  present  a  truer  expression  of  natural, 
harmonious  community-life  than  anything  else  we  have. 


^^^ 


Advertisinsi;   Sii>;ns 
The  Coiiipctitiz'c  Distribution  of  Infoniuition 


THE    COST   TO    THE    COMMUNITY         491 

In  so  far  as  they  do  so  they  are  beautiful.  But  that  they 
might  imaginably  be  raised  to  a  far  higher  standard  of 
design  and  execution,  while  still  retaining  their  natural 
simplicity,  any  artist  will  gladly  admit. 

Of  private  business-buildings  hardly  a  syllable  of  excuse 
can  be  said.  It  is  these  which  naturally  express  the  busi- 
ness-world, with  its  planlessness,  its  congestion,  its  con- 
stant internal  strife,  its  haste,  its  parsimony  of  space  and 
taste,  its  vulgar  prodigality  of  what  money  can  buy  and 
its  eternal  password:  "  Comparison,  comparison!  "  Within 
these  buildings,  for  factory  or  for  office,  there  resides 
no  peace,  no  harmony,  no  gentle  consideration  for  others, 
no  dignity  nor  deliberation,  no  high  ideals  of  beauty, 
except  as  they  exist  in  defiance  of  the  relentless  system 
about  them.  Individuals  there  may  be,  in  commercial 
authority,  who  are  dignified,  deliberate,  considerate,  and 
tasteful:  but  their  skill,  as  they  compete,  begets  the  loss 
of  these  same  things  for  millions  of  wage-earners  about 
them.  It  is  quite  fit  that  the  buildings  which  house  their 
efforts  should  be  what  they  are:  the  most  hideous  jumble 
of  the  incongruous,  the  planless,  the  distorted,  the  tawdry, 
which  it  is  possible  to  conceive  as  compatible  with  the 
wealth  which  they  produce  or  handle. 

If  exception  be  taken  to  this,  if  one  points  to  the  better 
factories  of  the  day,  surrounded  by  superficial  attempts  at 
grass  and  geometric  flower-beds,  or  at  such  buildings  as 
exhibit  truly  beautiful  decorative  detail,  in  contravention, 
the  reply  is  easy.  They  illustrate  two  things :  the  protest 
of  individual  good  taste  against  the  natural  fruit  of  the 
competitive  system,  and  the  beginnings  of  the  substitution 
of  cooperation  for  competition.  But  it  is  little  progress 
that  either  can  make.  The  same  cooperative  links  between 
man  and  man  which,  in  economics,  have  gained  for  the 
country  sufficient  increase  in  productive  efficiency  to  over- 


492  THE    COST    OF    COMPETITION 

balance  the  steadily  increasing  proportion  of  destructive 
competition,  are  beginning  to  make  themselves  felt,  in 
aesthetics,  in  sporadic  progress  against  the  degenerative 
tide  of  competition, — for  within  the  factory-walls  is  per- 
fect cooperation;  but  the  factories  are  governed  by  the 
offices,  and  they  are  exclusively  devoted  to  barter. 

Our  public  buildings,  on  the  other  hand,  are  uniformly 
of  a  high  standard  of  architectual  beauty.  Each  has  its 
technical  faults,  no  doubt;  but  as  a  class  they  represent 
the  best  we  have.  In  them  is  no  disposition  to  compress 
or  to  distort  to  competitive  ends;  there  is  no  need  for  it. 
Land  enough  is  used  to  obtain  perspective.  Dimensions 
are  chosen  with  an  eye  to  its  utilization  for  good  effect. 
Every  one  of  them  speaks  the  dignity  and  the  solidarity 
of  the  cooperative  state.  Most  of  them  suggest  the  pos- 
sibilities of  its  refinement. 

Compare  the  series  of  them :  the  state  capitols,  the  county 
court-houses,  the  city  libraries,  the  federal  buildings  at 
Washington,  with  the  average  buildings  inspired  by  "  indi- 
vidual initiative"  in  business  which  adorn  our  streets! 
Look  at  the  latter  collectively !  Distorted,  compressed  to 
the  narrowest,  with  no  space  for  effect,  with  none  to  offer 
were  there  space  to  perceive  it,  with  every  line  cut  short 
at  the  end  of  its  money-making  power;  with  its  tawdry 
best  face  forward,  with  no  sides  at  all  and  an  unspeakable 
rear;  with  no  regard  whatever  for  harmony  with  its 
neighbors, — compare  the  architecture  of  the  competitive 
community  with  the  worst  of  our  public  edifices! 

Here,  as  at  every  turn,  is  a  plain  glimpse  of  what  "  indi- 
vidualism "  means.  Were  not  all  of  these  buildings, 
public  or  private,  the  work  of  individuals?  Is  not  the 
Boston  Public  Library,  with  the  mural  decorations  within 
and  the  books  upon  its  shelves,  just  as  much  the  work  of 
individuals  as  is  any  stilted  down-town  office-building,  with 


THE    COST    TO    THE    COMMUNITY  493 

its  load  of  ledgers  and  weary  stenographers?  Is  not  the 
entire  difference  this:  That  when  the  object  in  view  is  the 
service  of  the  community  the  individuals  are  hired  to  do 
the  best  their  inspiration  can  create;  but  that  when  private 
profit  is  the  motive  power  the  individuals  are  hired  to  do 
the  worst  which  they  v/ill  allow  to  leave  their  hands?  Not 
that  ugliness  is  itself  desired;  but  that,  unfortunately,  that 
one  thing  which  is  hopelessly  incompatible  with  any  beauty: 
of  heart  or  mind  or  house  or  handiwork:  private  profit,  is 
preeminently  desired,  must  be  desired,  upon  pain  of  eco- 
nomic extermination.  That  is  the  inspiration  breathed  forth 
by  every  square  foot  of  surface  of  our  commercial 
streets  and  buildings:  ugliness  and  selfishness;  the  ugli- 
ness of  systematized  selfishness.^^ 

This  is  what  deforms  the  factories,  too.  Poor  Rus- 
kin's  soul  was  torn  with  the  idea  that  factories  were  inher- 
ently and  inevitably  ugly  and  that  there  was  so  little  hope 
of  future  riddance  of  them.  But  they  are  not.  Every 
dollar  that  can  be  spent  upon  them  which  will  improve 
their  time  and  effort  in  production  is  spent  upon  them; 
because  the  designers,  their  owners,  are  thereby  able  to 
place  the  difference  within  their  pockets.  No  one  in 
authority,  on  the  other  hand,  has  the  slighest  incentive  to 
make  them  beautiful:  the  owners  are  busy  in  town  and 
seldom  see  them;  the  operatives  have  had  taste  and  leisure 
squeezed  out  of  them.  Neither  has  any  more  use  for  a 
pretty  factory  than  a  New  England  farmer  of  1840  had 

18  Dr.  Emil  Reich,  in  his  "Success  of  Nations,"  says:  "Art,  when  it 
becomes  the  monopoly  of  a  limited  but  governing  class,  instead  of  being 
the  aim  and  object  of  national  ambition,  is  doomed  to  early  sterility.  Art 
will  never  consent  to  become  the  luxury  of  those  who  can  afford  to  pay. 
The  combined  fortunes  of  a  dozen  industrial  millionaires  will  do  nothing 
toward  inspiring  a  masterpiece.''  .  .  .  "A  growing  faction  whose 
immunity  from  the  cares  of  everyday  life  is  due  to  the  '  sweating '  of  a  sub- 
servient population  of  peasants  or  fellaheen  will  ever  remain  intellectually 
impotent." 


494  THE    COST    OF    COMPETITION 

for  a  veranda.  The  people  who  do  desire  beauty  of 
surroundings,  who  represent  the  taste  of  the  community, 
have  nothing  to  say  about  the  factories. 

This  situation  is  entirely  artificial.  There  is  no  eco- 
nomic reason,  competition  once  abolished,  why  the  present 
cost  of  each  factory  should  not  be  repeated  in  efforts  at 
beautifying  its  exterior,  its  interior  and  its  surroundings, 
while  the  community  were  still  richer,  as  a  result,  than  it 
is  now, — and  this  upon  the  basis  of  existing  methods  of 
production,  too.  There  is  no  engineering  reason  why  all 
the  smoke,  dust,  noise,  tall  stacks  and  desolated  ground 
should  not  be  abolished.  But  this  cannot  be  accomplished 
without  cooperation.  The  engineers  have  never  been 
called  upon  to  do  any  factory-designing  of  any  size  under 
these  conditions.  When  they  are,  Ruskln's  reincarnation 
may  rejoice  In  life  or  his  weary  soul  rise  in  peace  out  of 
Purgatory.  His  true  task,  seen  not  clearly  by  himself, 
will  then  have  been  accomplished. 

This  one  topic  might  profitably  fill  a  volume.  Here 
it  must  be  reduced  to  a  few  simple  statements.  One  fac- 
tor, however,  is  so  cogent  in  molding  our  standards  of 
architecture  and  out-door  art  that  It  must  receive  some 
special  attention.     This  factor  Is  congestion. 

Congestion.  Of  the  original  causes  of  congestion 
nothing  more  need  be  said  than  what  has  already  been 
stated  In  Part  I.  There  it  was  shown  how  purely 
economic  forces,  not  of  the  Individual  and  his  biological 
tendencies  but  of  his  legally  enforced  relations,  have  made 
natural  the  growth  of  the  sky-scraper  and  the  paved  street. 
These  things  exist  for  the  purposes  of  commercial  compe- 
tition. So  long  as  competition  continues  to  exist  and  to 
return  to  Its  devotees,  as  It  must,  the  maximum  Incomes 
paid,  just  so  long  will  the  best  engineering  skill  of  the 


THE    COST   TO   THE    COMMUNITY         495 

country,  and  billions  of  capital,  be  devoted  to  cherishing 
this  tendency  toward  congestion  and  ugliness.  In  the 
future,  if  we  make  no  alteration  in  our  method  of  eco- 
nomic organization,  it  must  be  expected  that  tunnels,  ele- 
vated roads  and  bridges  will  multiply;  speeds  will  increase; 
improved  elevators  will  make  the  fifty-story  building  as 
feasible  as  is  now  the  twenty-story;  flying-machines  may 
soon  add  their  enormous  possibilities  to  the  impulse. 
Under  these  permits  buildings  must  inevitably  become  nar- 
rower and  higher;  the  streets,  already  stony,  gusty  canons, 
must  become  still  straiter  crevasses,  or  even  tunnels,  by  the 
addition  of  upper  stories  of  their  own,  or  perhaps  mere 
bases  to  air  and  light-shafts.  Architecture  as  an  art, 
already  choked  and  discouraged,  will  then  have  departed 
in  despair.  The  underlying  point  of  all  design  will  have 
become  the  acme  of  compression,  congestion,  distortion, 
into  the  highest  possible  intensity  of  contact  between  man 
and  man,  the  highest  possible  speed  of  circulation. 

Of  such  clay  Is  modeled  the  popular  prognostications 
of  the  future  city.  These  pictures,  of  pen  or  pencil, 
appear  occasionally.  But  they  are  all  based  upon  premises 
which  are  false  because  too  narrow.  A  single  tendency 
Impelled  by  a  single  force,  In  the  ascendency  for  the  time 
being  only,  Is  supposed  to  develop  without  regard  to  its 
natural  time-limit  of  phase  or  to  the  Increasing  lack  of 
equilibrium.  These  pictures  disregard  the  fact  that  the 
very  speed  and  Intensity  of  the  growth  of  congestion 
Implies,  by  natural  law,  a  corresponding  speed  and  Inten- 
sity of  reaction  from  It.  The  congestive  tendency  of  the 
present  Is  the  visible  resultant  of  a  single  institution, 
commercial  competition,  which  for  the  past  half-century 
has  experienced  a  phenomenal  degree  of  unrestricted  and 
encouraged  growth.  If  It  cannot  be  imagined  except  as 
continuing  Indefinitely  In  the  future  in  unrestricted  growth. 


496  THE    COST    OF    COMPETITION 

then  what  we  have  pictured  must  be  the  result.  If,  on  the 
other  hand,  we  imagine  it  abolished,  if  we  observe  that  it 
is  about  to  abolish  itself,  if  we  recognize  that  its  natural 
span  of  life  is  already  exceeded,  its  later  days  being  already 
full  of  pain  and  tribulation;  if  we  remember  that  there 
are  other  and  more  basic  forces  within  the  social  configu- 
ration which  are  certain  to  resent  the  extreme  action  of 
this  one;  if  we  remember  that  barter  is  a  pure  despot,  on 
the  throne  as  the  sovereign  of  our  destiny  by  inheritance 
rather  than  by  right  or  fitness  and  that  the  wholesome  life 
of  a  community  is  always  able  to  dethrone  despotism,  by 
means  constitutional  or  by  violence,  whenever  it  may 
become  indubitably  worth  the  while, — if  we  remember  all 
these  things,  then  will  this  congestive  tendency  abandon  Its 
despotic  sway  over  our  imaginations  and  our  aims. 

This  congestive,  deformative  tendency  will  then  be  re- 
placed by  a  reverse  process,  in  fact,  as  energetic  as  is 
the  present  exaggerated  congestion.  The  sky-scrapers 
erected  in  record-breaking  time  will  sink  still  more  rapidly 
out  of  sight.  Fifty  years  has  put  them  up;  twenty  will 
suffice  to  bring  them  down.  The  streets  will  broaden 
spontaneously,  the  noise  will  die  away,  the  haste  that  is 
made  of  waste  will  give  way  to  the  dignity  of  movement  of 
conscious  power,  and  the  green  park-germs  will  grow  and 
expand  until  they  fill  all  places.  Streets  will  have  given 
way  to  avenues  and  boulevards.  Man,  no  longer  desiring 
to  be  within  clubbing-distance  of  his  neighbor,  will  be  con- 
tent to  telephone,  by  underground  lines.  The  present 
army  of  stenographers  and  clerks,  due  to  the  infinite  mul- 
tiplication of  accounts  and  of  communications,  a  genus 
indigenous  to  tall  ofiice-buildings  on  caiion-streets,  will 
have  dispersed  forever.  The  hundred  thousand  separate 
oflices  and  responsibilities,  needed  for  the  numerous  petty- 
officers  of  that  vast  civil  strife  which  we  call  commercial 


THE    COST   TO   THE    COMMUNITY         497 

competition,  will  have  become  a  thousand,  or  less,  all  the 
branches  of  a  single  purpose:  that  purpose  the  harmonious 
direction  of  an  hundred  times  the  present  quantity  of  pro- 
ductivity. A  half-dozen  office-buildings,  handling  the 
communications  concerned  with  production  only  and  none 
concerning  price  or  ownership,  will  suffice  to  replace  every- 
thing now  south  of  Canal  Street, — except  the  few  little 
factories,  and  they  will  have  fled  to  Indiana  and  Texas, 
where  they  belong.  Space  and  light  and  fresh  air  will  be 
no  longer  at  a  premium;  dimensions  will  no  longer  cost 
dollars,  as  now,  in  geometric  ratio.  Commercial  New 
York,  as  we  now  know  it,  will  have  disappeared.  Residen- 
tial and  official  New  York  will  line  the  Hudson  for  one 
hundred  and  thirty  miles  as  it  now  does  for  thirty,  and 
have  become  a  park  incidentally  to  its  expansion.  Man 
will  have  become  free,  and  therefore  natural,  once  more, 
and  will  build  only  what  he  enjoys  building  and  living  in 
and  looking  at;  he  will  no  longer  be  tempted  to  build  what 
he  is  hired,  as  a  tool  of  a  despised  master,  to  throw  off  for 
the  sake  of  furthering  commercial  competition.  The 
sheet-iron  cornices  in  imitation  of  marble  masonry  will 
have  followed  the  frantic  advertising-signs,  into  oblivion. 
What  will  it  all  be,  in  detail?  That  each  one  must 
answer  to  his  own  best  light.  Pick  up  your  best  examples 
of  free,  inspired  architecture!  Look  at  the  public  build- 
ings which  we  feel,  even  now,  shelter  but  improperly  the 
dignity  of  our  community-life,  fragmentary  as  it  is!  Turn 
to  any  federal,  state  or  county  capital  for  reply.  Look 
at  the  World's  Fair  buildings,  designed  for  the  fame  and 
the  glory  of  work  well  done,  in  pure  emulation,  but  not 
for  money,  not  in  competition !  Think  of  the  national 
bazaar  which  future  days  must  see  grow  up  in  each  of 
our  cities,  wrought  in  marble,  to  the  glory  of  the  flag  for 
all  time,   as   they  were   there   done   in   staff !     Think  of 


498  THE    COST    OF    COMPETITION 

Grant's  tomb  and  the  Palisades  Drive,  with  the  vista  of 
the  Hudson  for  a  background!  Imagine  our  public 
parks  and  monuments  all  become  free  to  grow,  cherished 
by  our  best  pride  and  endeavor,  now  no  longer  absorbed 
in  barter !  Draw  from  your  best  memories  of  Windsor, 
of  the  Champs  Elysees  and  the  Arc  de  Triomphe,  of 
Heidelberg  and  the  Wartburg  as  they  once  were,  of  the 
Acropolis,  of  the  Taj  Mahal,  of  any  masterpiece  of  human 
monument  where  environment  has  been  fully  utilized  to 
bring  out  the  beauty  of  architecture!  Turn  from  these 
to  the  Congressional  Library  at  Washington,  or  the  Bos- 
ton Public  Library,  whichever  tendency  you  prefer! 
Place  behind  the  human  aspirations  v-isible  in  all  existing 
art  that  combination  of  American  skill,  energy  and  devo- 
tion which  is  now  absorbed  and  expended  in  organizing 
commercial  warfare!  Let  the  whole  thing  grow,  for  fifty 
years,  as  the  steamboat  and  the  electric  spark  have  grown 
in  the  past  hundred,  as  commercialism  itself  has  grown  in 
the  past  fifty  years!  Go  back  to  your  father's  childhood 
and  ask  the  world  what  will  the  railroad  be  and  what  the 
western  limit  of  American  civilization  in  1900!  Let  the 
magnitude  and  the  irresistible  power  of  future  expansion 
which  these  things  suggest  to  you  be  a  measure  of  what 
will  occur  very  shortly  to  all  in  which  we  now  rejoice  as 
beautiful,  of  parks  and  boulevards  and  dwellings:  the 
reversal  of  all  congestion.  Such  expansion  will  then  have 
become  a  fact,  with  as  little  regard  to  present  popular 
opinion  concerning  the  probable  or  the  possible  as  have 
the  transatlantic  steam-ferry  and  the  American  Philip- 
pines. 

Is  this  a  dream?  Is  the  trolley-road,  greatest  factor  in 
present  urban  configuration,  a  dream?  Thirty  years  ago 
it  was  merely  a  dream.  Ten  years  ago  it  was  widely  ques- 
tioned.     Is  slavery  now  a  fact?     Fifty  years  ago  it  was 


THE    COST   TO   THE    COMMUNITY  499 

called  the  institution  of  the  ages,  founded  upon  the  Bible, 
stable  as  the  eternal  hills,  its  abolition  a  dream.  Is  the 
abolition  of  barter  a  dream?  Why,  it  is  already  a  race 
between  all  parties  to  see  who  may  most  quickly  kill  all 
horizontal  competition.  Only  the  vertical  is  left,  practi- 
cally. Science  and  invention  contribute  daily  to  the  links 
between  the  industries  which  knit  them  too  closely  for 
further  competition,  which  whet  emulation  by  bringing 
men  more  closely  side-by-side  instead  of  face-to-face. 
Every  man  in  business  throws  his  best  strength  against 
horizontal  competition  and  toward  consolidation;  Into 
pool,  trust  or  agreement  if  the  law  allows;  into  still  firmer 
consolidation  If  it  does  not.  Already  are  the  people  begin- 
ning to  exterminate  vertical  competition  by  their  votes: 
for  governmental  coal-mines,  for  municipal  light  and  heat, 
for  downright  socialism;  not  fast  enough  to  parallel  the 
growth  of  barter  at  the  hands  of  the  barons  of  industry, 
who  are  urging  it  toward  a  tottering  instability  faster  than 
can  all  argument,  but  enough  to  disturb  the  conservative 
press  and  the  political  platforms.  Competition  will  be 
gone  from  us,  by  natural  gravitation  through  invisible 
pores,  as  of  water  through  sand,  before  we  know  it;  but 
if  not,  then  it  will  be  gone  by  national  surgery,  in  relief  of 
cancer.  Whether  we  love  it  or  whether  we  hate  It, 
whether  we  be  socialist,  anarchist  or  conservative  politician, 
merchant  prince,  financier  or  day-laborer,  our  every  act 
drives  daily  on  the  car  of  progress  toward  the  fatal  insta- 
bility of  the  present  system,  away  from  commercial  com- 
petition as  an  accepted  public  institution  and  toward  the 
recognition  of  the  only  alternative :  universal  emulative 
cooperation  as  a  national  principle. 

In  all  these  and  in  less  tangible,  indictable  ways  does 
the  instituted  method  of  determining  price  and  ownership 


500  THE    COST   OF   COMPETITION 

by  barter  undermine  the  moral  and  aesthetic  standards  of 
our  community-life.  The  big  flaws  can  be  listed  and 
arraigned.  But  what  can  be  said  of  all  the  little  ones,  of 
the  thousand-and-one  ways  in  which  the  ethics  of  the  mar- 
ket have  invaded  and  perverted  our  daily  lives? 

All  social  intercourse  is  ruined  by  it.  The  men  are 
too  tired  at  night  or  too  much  "  upon  the  road  "  to  enjoy 
even  their  own  family-life,  not  to  mention  any  true  com- 
munity of  mind  and  soul,  could  they  get  it.  But  they  can- 
not get  it.  The  whole  social  code  is  turned  over  to 
womankind  for  direction,  and  woman  is  one  of  man's  ribs: 
if  he  makes  comparative  advantage  of  individual  over 
individual  the  criterion  of  all  material  worth,  of  all  per- 
mission to  live,  how  may  she  do  otherwise?  How  may  her 
social  functions  be  designed  for  other  than  purposes  of 
comparison?  Is  it  not  inevitable  that  her  every  dinner  or 
at-home,  or  even  each  little  afternoon-tea,  must  be  one 
degree  more  elaborate,  more  "  recherche,"  than  that  of 
her  neighbor  and  rival,  or  her  husband's  competitor's  wife, 
or  it  is  worthless?  Must  she  not  be  careful  to  choose  her 
guests  to  the  promotion  of  her  husband's  "  interests  ";  or 
if  she  chooses  some  whom  she  really  likes,  can  they  come, 
not  being  able  to  wear  a  new  gown?  True  wife,  her 
very  devotion  leads  her  in  the  footsteps  of  Eurydice, 
downward,  into  the  odium  of  systematic  comparison.  It 
is  but  natural,  under  the  conditions,  that  her  friends  can- 
not be  cultivated  by  her  because  they  are  worthy  so  much 
as  because  they  possess  wealth  and  power,  dress  well,  enter- 
tain "  well  "  and  succeed  in  snubbing  a  little  more  gener- 
ally and  relentlessly  than  she.  There  will  always  be  the 
fops  and  fools  in  the  land,  the  Lord  knows,  but  is  it  nothing 
to  the  detriment  of  our  civilization  that  to  the  fops  and 
fools  should  be  artificially  accorded  the  means  for  the 
preferment  of  the  ostentatious  to  the  beautiful;  and  that 


THE    COST   TO    THE    COMMUNITY  501 

to  them  should  be  added  so  many  others  who,  wishing  to 
be  true  and  right,  yet  cannot  afford  to  drop  behind  in  the 
race  for  display?  Is  it  not  a  national  mistake  of  conse- 
quence that  to  those  who  reject  from  their  lives  all  but  the 
true  and  the  beautiful  and  the  considerate  must  be  lost 
at  the  same  time  all  right  to  that  leisure  and  material 
competence  which  alone  permits  true  social  intercourse? 

At  every  turn  of  life  the  insidious  poison  of  barter  dis- 
figures and  annoys.  It  is  not  alone  that  it  maintains  our 
slums  and  Tenderloins,  creates  our  Iroquois  Theater  and 
"  General  Slocum  "  horrors  and  fills  our  political  machines 
and  prisons.  In  each  moment  and  each  minor  way  of 
life  its  ugly  inconsiderate  spirit  can  be  detected,  as  the 
guiding  one  of  life-conduct,  in  its  work  of  undermine  and 
desecration.  It  is  barter  which  crowds  our  street-cars  and 
gives  us  hideous  Inanities  of  advertisement  to  gaze  at  as 
we  ride;  which  impudently  tosses  unrequested  joke-books 
and  caramel  packages  into  our  laps;  which  orders  us  to 
"  step  lively  there !  "  and  fills  our  public  places  with  bar- 
baric confusion  and  cynical  discourtesy;  which  fills  the 
periodicals  which  it  sells  with  two-thirds  blatant  advertis- 
ing-matter and  one-third  silly  pastime  reading-matter,  if 
no  worse;  which  peoples  our  Babel-streets  with  shrill- 
voiced  precocious  newsboys  and  hoarse-voiced  untutored 
truckmen;  which  overloads  the  wagons  and  forces  the 
gaunt  specters  of  what  might  be  proud  horse-flesh  to  share 
the  cruel  strife  of  the  masters;  which  harnesses  us  in  what 
Walter  Crane  calls  "  tubular  "  clothing,  most  efiicient  for 
expressing  the  alertness  of  the  gladiator,  as  fit  for  the 
expression  of  truly  civilized,  cultivated  taste  in  dress  as  is 
plate-armor;  which  chooses  for  us  our  slang  forms  of 
speech,  indicative  ever  of  the  jauntiness  of  the  boxer; 
which  ruins  our  teeth  and  our  stomachs  with  hasty  eating 
and  adulterated  foods,   arraying  the  quick-lunch  patrons 


502  THE    COST    OF    COMPETITION 

along  the  counter;  and  the  horses  with  their  nose-bags 
along  the  curbstone;  which  cherishes  alcoholism  and  dese- 
crates our  privacy  by  means  of  patent  "  medicines  "  and 
their  advertisements;  which  keeps  the  peripatetic  book- 
agent  in  circulation  and  hand-bills  our  doors;  which 
denudes  our  forests  and  ruins  our  climate;  which. puts  our 
outward  aspect,  between  the  natural  beauty  of  savagery 
and  the  cultivated  beauty  of  true  civilization,  in  the  posi- 
tion of  Kipling's  raw  recruit,  who  "  had  lost  his  gutter- 
devil  and  hadn't  found  his  pride."  It  is  barter,  ever 
present  in  spirit  as  well  as  in  deed,  which  has  driven  away 
from  us,  as  a  nation,  all  patience  with  the  art  that  is  longer 
than  life;  which  declares  all  painting  worthless  which  does 
not  catch  the  eye  with  novelty  of  style  and  every  note 
dull  which  Is  not  played  tremulo;  which  dictates  for  us  our 
long  hours  and  concentrated  form  of  work  and  the  hurry 
of  our  recreations,  poisoning  our  every  Indoor  moment 
with  comparisons  of  worth  and  our  every  out-door  breath 
with  comparisons  of  speed;  which  forces  us  all  to  choose 
between  being  irritable  critics  or  wearied  cynics;  which 
makes  nervous  breakdown  our  national  disease  and  spreads 
over  the  land  a  network  of  well-filled  sanitariums;  which 
forces  us,  at  every  turn  of  our  over-intricate  life,  to  choose 
the  strenuous  while  preferring  the  simple;  which,  and  not 
democracy,  has  robbed  us  of  the  stately  courtesy  of  older 
and  unsold  days,  when  men  had  time  to  live;  which 
casts  over  every  line  of  the  divine  picture  of  true  success  in 
life,  of  life  properly  one  glad  sweet  natural  song,  a  tinsel 
curtain  whose  woof  is  external  ostentation  and  whose  warp 
is  concealed  antagonism.  For  such  is  the  philosophy  and 
the  fact  of  barter,  when  legalized,  operated  and  wor- 
shiped upon  a  national  scale. 


VI 
CAPITALISM   AND   LABOR 

"  We  impute  deep-laid,  far  sighted  plans  to  Csesar  and 
Napoleon;  but  the  best  of  their  power  was  in  nature,  not 
in  them." — Emerson. 

"  In  my  present  position  I  could  scarcely  be  justified 
were  I  to  omit  raising  a  warning  voice  against  this 
approach  of  returning  despotism.  It  is  not  needed 
or  fitting  here  that  a  general  argument  should  be  made 
in  favor  of  popular  institutions;  but  there  is  one  point, 
with  its  connections,  not  so  hackneyed  as  most  others,  to 
which  I  ask  a  brief  attention.  It  is  the  effort  to  place 
capital  on  an  equal  footing  with,  if  not  above,  labor,  in 
the  structure  of  government.  It  is  assumed  that  labor  is 
available  only  in  connection  with  capital;  that  nobody 
labors  unless  somebody  else,  owning  capital,  somehow  by 
the  use  of  it  induces  him  to  labor. 

"  Labor  is  prior  to,  and  independent  of,  capital. 
Capital  is  only  the  fruit  of  labor,  and  could  never  have 
existed  if  labor  had  not  first  existed.  Labor  is  the 
superior  of  capital,  and  deserves  much  the  higher  con- 
sideration."— Abraham  Lincoln,  December  3,  1861. 

IN  considering  the  ethical  aspects  of  the  relations  be- 
tween capitalism  and  labor  three  fundamental  facts, 
amounting  to  principles,  must  be  kept  carefully  to 
the  fore,  viz. : 

( I )  That  the  pressure  upon  the  individuals  involved 
upon  either  side,  but  particularly  upon  the  labor  side, 
comes  not  from  the  individuals  on  the  opposing  side,  hut 
from  the  nation's  general  hurden  of  barter; 

503 


504  THE    COST    OF    COMPETITION 

(2)  That  it  is  enforced  by  law  and  public  opinion,  and 
is  avoidable  by  either  side  only  to  an  insignificant 
degree; 

(3)  That  it  always  and  inevitably  starts  with  labor  in 
a  position  inferior  to  and  dependent  upon  capitalism. 

When  a  difference  of  opinion  as  to  wages,  hours  of 
labor,  etc.,  arises  between  an  employer  and  his  men,  those 
directly  party  to  it  cannot  be  expected  to  see  it  otherwise 
than  as  a  purely  personal  and  local  question.  Any  inter- 
ested onlookers  who  may  take  sides  with  either  party  are 
naturally  prone  to  do  the  same.  With  those  at  a  greater 
distance,  however,  with  the  students  of  sociology,  the 
editorial  press,  the  legislators  and  the  arbitrators,  such  an 
attitude  is  not  permissible.  There  should  be  no  difficulty 
on  their  part  in  forgetting  the  personal  aspect  of  the  case 
and  in  recalling  the  true  breadth  and  depth  of  the  situa- 
tion. 

Indeed,  of  such  vital  importance  to  the  entire  com- 
munity is  justice  of  attitude  toward  this  tremendous  ques- 
tion that  it  may  be  urged  that  no  man  possesses  the  right 
to  speak  publicly  upon  it  until  he  has  mastered  the  fact 
and  the  spirit  of  these  three  fundamental  principles. 
They  are  always  operative  and  effective,  and  must  always 
constitute  the  starting-point  for  any  consideration  of  the 
case. 

The  principle  first  stated  is  the  most  important.  It 
may  be  true  that  avarice  or  tyranny,  or  their  opposites, 
might  still  animate  any  given  set  of  employers  or  labor- 
ers, and  cause  friction,  were  both  free  from  all  irritations 
extraneous  to  the  local  question  between  them;  human 
nature  is  to  be  expected  to  be  imperfect  under  the  best  of 
conditions.  But  even  so,  its  magnitude  compared  with 
the  present  intensity  of  combat  would  be  insignificant. 
For  the  friction  arising  may  be  safely  assumed  to  be  pro- 


CAPITALISM    AND    LABOR  505 

portlonate  to  the  sum  involved  in  question.  Now  the 
increase  in  purchasing-power  for  which,  or  the  decrease 
against  which,  any  strike  is  commonly  inaugurated  sel- 
dom exceeds  ten  per  cent,  of  the  prevailing  rate  of  income. 
It  is  usually  much  less,  in  reality.  This  is,  therefore,  the 
total  amount  by  which  the  situation  of  the  laborer  could 
be  ameliorated  by  a  complete  cessation  of  all  bargaining 
upon  the  employer's  part,  or  vice  versa.  But  the  trouble 
with  the  laborer  is  not  that  his  purchasing-power  has  been 
depressed  ten  per  cent,  below  his  productivity  by  his 
employer's  refusal  to  give  him  that  ten  per  cent.  The 
trouble  is  that  Ms  purchasing-power  is  currently  de- 
pressed below  his  productivity,  until  it  amounts  to  only 
thirty  per  cent,  of  it,  by  the  efforts  of  every  man  in  the 
country  who  is  engaged  in  influencing  prices  or  market; 
it  is  because  the  cost  of  the  entire  volume  of  barter 
throughout  the  land  is  charged  against  and  deducted  from 
his  productivity,  to  the  deterioraton  of  his  purchasing- 
power.  It  is  against  the  unconscious  antagonism  of  this 
myriad  of  utter  strangers  that  his  endurance  is  pitted, 
not  against  his  single  visible  antagonist,  his  employer.  It 
is  because  the  harm  which  Is  done  his  purchasing-power 
by  this  army  of  outsiders  is  at  least  from  ten  to  twenty 
times  as  great  as  Is  that  Involved  in  his  relations  with  his 
employer,  seventy  per  cent,  compared  with  a  paltry  three, 
that  the  situation  Is  hopeless  of  peace.  In  other  words, 
his  average  wage  amounts  to  but  thirty  per  cent,  of  his 
productivity.  Feeling  Its  Insufficiency,  he  strikes  for  a 
ten-per-cent.  "  raise,"  to  thirty-three  per  cent,  of  his  pro- 
ductivity, or  in  protest  against  an  equal  "  cut,"  to  twenty- 
seven  per  cent,  of  his  productivity.  But  before  the  dis- 
crepancy between  his  productivity  and  his  purchasing- 
power,  and  hence  the  discontent  In  the  situation,  can  be 
wiped  out,  his  wages  must  be  Increased  by  some  sixty  or 


5o6  THE    COST    OF    COMPETITION 

seventy  per  cent,  of  his  productivity,  or  by  some  twenty 
times  what  he  is  striking  for.  And  usually  a  ten-per-cent. 
raise  or  cut  is  all  that  is  involved  in  dispute.  Therefore, 
the  utmost  avarice  on  the  part  of  the  employer  can  aggra- 
vate, his  utmost  generosity  can  ameliorate,  the  loss  which 
causes  all  the  friction  between  capitalist  and  laborer  by  not 
more  than  one-twentieth.  That  is  why,  in  a  nut-shell,  the 
most  liberal  of  employers  still  have  strikes,  while  the 
meanest  of  them  are  still  able  to  retain  a  laboring  force 
about  them. 

No  words  can  properly  emphasize  the  essentiality  of  a 
grasp  of  this  truth  to  a  fair  understanding  of  the  situa- 
tion and  its  ethics.  The  attitude  of  the  laborer  is  most 
naturally  that  of  one  robbed  of  seventy  per  cent,  of  his 
just  dues.  He  could  not  state  it  in  figures;  he  could  not 
explain  the  forces  at  work  to  produce  it.  But  he  feels 
it,  in  his  daily  life,  with  a  moral  certainty  which,  when 
integrated  throughout  the  millions,  throws  labor's  atti- 
tude into  the  light  of  the  most  wonderful  patience  and 
moderation  rather  than  of  the  hasty  avarice  and  tyranny 
which  is  commonly  ascribed  to  it  by  the  superficial 
observer. 

The  employer,  on  his  part,  is  not  conscious  of  having 
inflicted  any  such  heinous  wrong  as  the  robbery  of  seventy 
per  cent.,  if  indeed  he  be  conscious  of  having  inflicted 
any  robbery  at  all.  He  is  not  only  not  taking  a  seventy 
per  cent,  which  can  be  visibly,  definitely  computed  as 
deducted  from  the  laborer's  net  productivity,  but  not  even 
the  ten  per  cent,  which  Is  admittedly  under  dispute  may 
be  classed,  to  his  opinion,  as  such.  There  is  no  known 
system  of  consistent  economics  by  which,  under  the  pres- 
ent plan,  the  net  productivity  of  the  laborer  can  be  cal- 
culated and  from  which,  as  a  basis,  the  laborer  can  be 
said  to  be  getting  too  much  or  too  little.     It  is  an  accepted 


CAPITALISM    AND    LABOR  507 

idea  that  labor,  as  well  as  the  market,  is  to  barter  for  its 
price  and  to  get  as  much  as  It  can.  The  fact  that  the  same 
minds  at  the  same  time  hold  the  quite  incompatible  idea 
of  there  being  a  naturally  "  fair  wage  "  does  not  dis- 
prove the  proposition.  The  same  people  commonly 
speak,  in  successive  moments,  of  the  "  fair  wage  "  and 
of  the  divine  right  of  every  man  to  "  get  his  price," 
meaning  all  that  he  can  get,  just  as  if  the  two  ideas  were 
not  hopelessly  inconsistent.  The  law,  for  instance, 
declares  that  there  is  such  a  thing  as  a  "  fair  "  cab-hire, 
and  therefore  makes  it  an  offense  for  the  cabman  to  bar- 
gain for  more.  The  law  does  not  hold,  on  the  other  hand, 
that  bargaining  for  the  best  wage-rate  obtainable  in  other 
lines  is  an  offense;  and  it  has  therefore  consistently  refused 
for  years  to  recognize  any  such  thing  as  a  "  fair " 
minimum  wage  for  general  classes  of  labor.  So  far  it 
has  been  consistent.  The  inconsistency  of  its  attitude 
toward  cab-fares  and  postage-stamps,  on  the  one  hand, 
and  toward  the  prices  of  all  other  sorts  of  labor  on  the 
other,  it  has  never  attempted  to  explain. 

The  attitude  of  the  laborer  is  very  naturally  one  of 
grievance,  therefore,  and  that  of  any  just-minded  person 
in  the  same  situation  would  be  the  same.  The  attitude 
of  the  employer,  likewise,  is  very  naturally  one  of  con- 
scious rectitude,  and  such  would  be  that  of  any  just  per- 
son in  his  situation.  The  obvious  inconsistency  between 
the  two  Is  not  to  be  reconciled  or  understood,  by  the  most 
thorough  of  observers,  except  by  the  light  of  the  fore- 
going analysis  of  the  cost  of  competition.  Until  this  be 
grasped  by  the  majority  of  the  people  and  the  source  of 
all  the  Irritation  removed  by  their  conjugate  action, 
laborer  and  employer  cannot  possibly  cease  their  bitter 
strife.  No  amount  of  generosity  on  either  side,  no  amount 
of   fair-minded   arbitration    from    without,    may   possibly 


5o8  THE    COST    OF   COMPETITION 

be  expected  to  more  than  slightly  ameliorate  the  friction, 
— to  veil  the  sparks  and  conceal  the  heat,  as  water  does 
on  grinding  bearings,  without  accomplishing  effective 
lubrication. 

But  such  an  ideal  condition  of  extreme  generosity  on 
either  side,  or  of  a  perfection  of  arbitration  from  a  dis- 
interested (and  therefore  unconversant)  audience,  can 
never  be  practicably  hoped  for.  The  second  principle 
stated  at  the  opening  of  the  chapter  must  ever  be  active. 
Given :  the  agreement  between  all  parties,  those  without 
as  well  as  those  within  the  action  In  any  case,  that  the  only 
way  to  settle  upon  the  proper  figure  of  average  wage  for 
any  sort  and  amount  of  labor,  under  any  given  condi- 
tions, Is  by  barter,  is  by  a  trial  of  strength  between  those 
awarding  and  those  receiving  the  wage, — given  these 
premises  and  the  law  of  equilibrium  ensures  that  between 
the  two  parties  must  currently  occur  that  maximum 
amount  and  cost  of  contest,  in  the  shape  of  strikes,  boy- 
cotts and  lock-outs,  which  the  two  can  bear  without  pre- 
ferably ceasing  contact  altogether. 

That  the  premises  are  actual  hardly  needs  argument. 
There  Is  no  more  rigid  unwritten  law  in  the  land,  at 
present,  than  that  the  average  wage  is  to  be  settled  only 
by  barter.  If  It  were  only  recognized  that  there  is  such  a 
thing  as  a  naturally  correct  wage,  although  it  would  still 
leave  open  the  great  question  as  to  how  to  determine  what 
it  is  In  any  case,  there  would  yet  be  hope  of  peace.  But 
the  very  privilege  of  holding  aloof  from  any  reference 
of  the  wage-question  to  natural  law,  even  when  it  Is  sus- 
pected to  exist,  the  freedom  to  refer  its  settlement  to 
individual  contest  of  Individual  might,  is  regarded  as  one 
of  our  fundamental  political  rights,  to  be  defended  as  a 
sacred  thing.  Even  the  substitution  of  compulsory  ar- 
bitration,   equivalent    to    trial    by    jury,    for    the    duello 


CAPITALISM   AND   LABOR  509 

called  competition,  is  so  widely  resented  as  to  be  imprac- 
ticable,— as  It  must  naturally  prove  to  be  from  other 
reasons. 

This  process  of  settlement  by  duello  being  funda- 
mentally in  the  premises,  it  follows  that  the  process  called 
"  charging  all  the  traffic  will  bear  "  must  apply  just  as 
relentlessly  against  the  employer  in  his  competition  with 
labor  as  it  does  against  the  consumer  in  his  competition 
with  the  employer  or  the  capitalist.  It  Is  axlomatically 
inevitable  that  each  party  to  such  enforced  strife  should 
push  his  contention  to  the  point  where  further  gain  there- 
from will  be  counterbalanced  and  absorbed  by  the  cost  of 
contention  incidental  thereto. 

But  at  the  other  extreme, — supposing  existing  peace 
between  labor  and  employer,  the  negotiations  not  yet 
begun,  but  with  the  wage-question  open  for  settlement  by 
barter, — this  net  gain  would  be  very  far  from  zero.  The 
fight  once  declared  on,  any  slight  activity  of  offense,  from 
either  side,  will  always  bring  in  a  return  great  in  propor- 
tion to  the  cost.  Therefore,  the  profitableness  not  only 
of  resistance,  but  of  aggressiveness,  will  quickly  become 
obvious  to  all  parties.  Some  considerable  exertion  of  It  Is 
Inevitable. 

Indeed,  this  can  be  proven  by  reductio  ad  ahstirdiim. 
For  let  it  be  supposed  that  either  side  fails  to  contest  the 
ground.  If  that  side  be  labor,  the  pressure  from  above 
will  quickly  reduce  it  to  that  degree  of  depression  that 
the  resultant  brutalizatlon  (see  page  419)  has  been 
sufficient  to  make  it  resist  and  combat.  If  that  side  be 
the  employer,  then  will  the  pressure  from  below  quickly 
elevate  wages  to  such  a  point  that  the  peace-loving  em- 
ployer can  no  longer  compete  with  his  less  conscientious 
and  more  combative  neighbors;  and  the  effect  of  avarice 
upon  human  nature  will  always  ensure  that  there  are  some 


510  THE    COST    OF   COMPETITION 

such.  Either  the  matter  will  pass  into  the  latter's  hands, 
to  the  extinction  of  the  former,  or  the  original  employer, 
brutalized  by  the  same  excess  of  pressure  and  worry  which 
was  before  imagined  as  applied  to  peace-loving  labor,  will 
alter  from  neutral  to  combative.  Hence,  combat  will 
ensue. — Q.  E.  D.^ 

The  forces  thus  pictured  in  extreme,  .to  prove  the 
necessary  existence  of  combat,  also  prove  that  its  average 
intensity  will  be  determined,  as  stated  above,  by  each  side 
suffering  the  maximum  cost  of  contention :  by  labor's 
undergoing  the  minimum  starvation-wage  and  the 
maximum  proportion  of  unemployed  time,  by  the  cap- 
italist's endurance  of  the  maximum  disturbance  by  strikes, 
lock-outs,  union-tyranny,  etc.,  which  will  permit  him  to 
remain,  on  the  average,  profitably  in  business.  The  law 
of  fluid  equilibrium  in  economic  activities  declares  that 
this  intensity  of  combat  accompanying  a  given  volume  of 
labor  cannot  depart  far  from  the  aggregate  proportion 
of  barter  to  production  in  the  entire  industry  or  the  entire 
community.  In  any  individual  case  the  departure  of 
intensity  of  combat  from  the  average  .will  be  determined, 
of  course,  by  local  conditions.  But  such  departure  will 
always  be  small.  Here  and  there  some  concern  will  be 
found  enjoying  almost  perpetual  peace.  Occasionally 
will  be  found  others  which  seem  to  be  always  in  hot 
water.  Neither  are  frequent.  Absolute  peace  is,  I 
believe,  quite  unknown. 

The  detailed  fact  which  determines  this  relation  is  the 
fluidity  of  labor  in  its  transfer  between  one  industry,  or 
one  employer,  and  another.     There  are,  of  course,  resist- 

1  This  demonstration  is  respectfully  dedicated  to  those  who  revere  both 
their  Euclid  and  the  competitive  wage-system;  who  call  for  peace  between 
labor  and  the  capitalist,  where  there  is,  and  can  be,  no  peace.  The  class  is 
by  no  means  either  small  or  mediocre,  and  the  reader  may  feel  no  shame 
in  finding  himself  in  it  and,  with  it,  in  the  wrong. 


CAPITALISM    AND    LABOR  511 

ances;  the  fluid  is  viscous.  In  skilled  labor  trades  cannot 
be  disregarded.  Even  in  unskilled  labor  the  removal  of 
the  household  is  a  serious  obstacle  to  the  free  search  for 
the  betterment  of  employment, — a  factor  which  was 
made  good  use  of  by  the  employers  in  the  famous  Home- 
stead strike.  But  in  general  it  may  be  accepted  that  labor 
flows  naturally  to  the  point  of  best  wages  or  pleasantest 
work.  Hence  the  rate  of  wages  for  a  given  grade  of 
exertion  is  practically  fixed  over  large  areas  of  country. 
The  thing  which  fixes  it  is  the  starvation-wage,  depend- 
ing upon  the  accepted  minimum  standards  of  life.  The 
reason  why  wages  are  higher  here  than  in  Europe  is 
because  the  American  laborer  will  not  tolerate  the  grade 
of  life  which  the  European  will  accept.  In  this  sense, 
and  this  only,  does  our  higher  standard  of  education  raise 
wages.  The,  higher  average  individual  productivity  in 
America,  affording  a  larger  aggregate  volume  of  wealth 
for  distribution,  is  an  effect,  and  not  a  cause,  of  the  higher 
wage.  Native  American  labor  is  racially  more  effective 
than  European;  but  the  fruit  of  its  efl^ciency  is  not  greater 
wages,  but  more  barter,  than  elsewhere.  (See  page 
257.)  For  the  primary  characteristic  of  economic  Dissi- 
pation :  that  it  tends  to  grow  indefinitely,  absolutely  with- 
out limit,  ensures  that,  however  great  may  be  the  avail- 
able volume  of  wealth  distributed,  economic  dissipation 
will  absorb  of  it  all  which  is  not  necessarily  left  over  for 
labor  to  persuade  it  into  continuance  of  production. 
It  would  absorb  still  more,  reducing  American  labor  to 
the  level  of  European,  were  it  not  for  our  higher  stand- 
ards of  individual  freedom  and  comfort,  born  of  the 
virgin  continent  and  cherished  by  our  every  tradition  of 
patriotism  and  liberty,  leading  to  stouter  resistance  to  its 
encroaching  demands.  It  is  this  resistance  alone, 
organized  into  systematic  expression  by  the  trades-union 


512  THE    COST    OF   COMPETITION 

and  the  strike,  as  tyrannical  as  was  the  colonial  army  of 
independence,  which  keeps  wages  up.  It  is  the  scab  and 
the  strike-breaker,  aided  by  the  man  who  urges  upon  labor 
lower  standards  of  living,  which  alone  keeps  them  down. 

Therefore,  when  any  employer  finds  himself  in  contest 
with  his  employees,  let  him  remember  that  he  is  face  to 
face,  not  with  a  paltry  handful  of  men,  or  a  few  hundred, 
or  a  few  thousand,  but  with  the  seried  ranks  of  the  whole 
deep-chested  class  of  American  workmen,  twenty-five  mil- 
lions in  number, — the  class  which  makes  Theodore  Roose- 
velt "  proud  to  be  an  American."  He  cannot  depress 
wages,  or  lengthen  hours,  or  exact  conditions  from  the 
skirmish-line  with  which  he  is  in  parley,  except  he  can 
enforce  them  against  the  entire  body  of  the  army. 

The  same  is  true  of  the  employees:  they  cannot  per- 
manently secure  better  wages  or  shorter  hours  or  greater 
freedom  except  they  make  themselves  effective  against 
the  entire  class  of  employers,  by  national  harmony  of 
action. 

But  beyond  this,  and  much  more  important,  is  the  fact 
that  both  of  these  great  bodies  of  citizens  are  coerced  by 
the  presence  of  the  tyrannous  institution  of  barter,  a  devil 
unconsciously  harbored.  The  employer,  as  he  hears  the 
muttering  of  discontent,  is  threatened  by  a  broad  and 
inevitable  consequence  of  the  reduction  of  the  purchasing- 
power  of  the  millions  by  the  costly  presence  of  his  and  his 
colleagues'  dissipative  competition.  It  is  not  his  own  an- 
tagonism, visibly  directed  against  his  employees,  which 
irritates  them;  it  is  that  directed  against  his  commercial 
competitors  and  his  consumers,  lumped  with  its  parallels 
all  over  the  land,  which  robs  them  of  their  independence, 
of  two-thirds  of  their  rightful  purchasing-power,  and  con- 
stitutes the  true  source  of  their  discontent.  He  is  not  deal- 
ing with  individual  men,  nor  with  individual  passions,  nor 


CAPITALISM   AND   LABOR  513 

with  theories;  he  is  in  negotiation  against  a  soulless, 
unfeeling,  all-absorbing  instituted  fact,  enforced,  in  uncon- 
scious unity  of  action,  by  seventy  millions  of  people,  by 
the  national  maintenance  of  commercial  competition; 
administered  by  activities  like  his  own,  contentious  and 
grasping,  but  of  which  his  own  are  but  a  microscopic 
part;  the  fruit  more  of  his  efforts  against  his  peers,  his 
competitors  and  his  consumers,  than  of  his  efforts  against 
his  employees.  He  need  not  be  irritated  by  the  actions 
of  his  men;  they  are  but  expressing  the  inevitable  biolog- 
ical reaction  against  the  presence  of  this  evil.  He  need 
not  hope  to  prevail  against  them,  except  as  he  may 
ameliorate  the  condition  of  all  labor  by  the  restriction 
of  all  free  competition,  horizontal  as  well  as  vertical. 

The  men,  on  their  side,  need  also  to  see  his  helplessness 
to  better  matters.  While  the  employers  are  the  Individ- 
uals who  happen  personally  to  conduct  and  oversee  bar- 
ter, and  are  therefore  more  guilty  than  are  the  public, 
yet  they  are  responsible  chiefly  as  a  unit-body  and  as 
Individuals  only  as  the  guides  and  models  of  American 
public  policy.  Obvious  individual  avarice  may  always  be 
publicly  condemned  and  resented  to  advantage;  but  the 
avarice  of  the  Individual  would  be  Impotent  to  harm  were 
it  not  backed  by  the  united  avarice  of  the  country, 
organized  Into  the  legal  support  of  barter. 

These,  then,  are  the  first  lessons  to  the  average  citizen 
who  condemns  strikes : 

( 1 )  That  the  settlement  of  wages  by  barter,  which  he 
supports,  makes  Inevitable  a  certain  Intensity  of  barter  in 
the  form  of  strikes,  etc. 

(2)  That,  however  much  the  community  of  laborers 
may  lose  in  any  one  Instance  by  striking,  in  wages  lost, 
the  general  rate  of  wages  for  the  entire  laboring  class  Is 
always   higher    as   the    proportion    of   strikes    Increases. 


514  THE    COST    OF    COMPETITION 

Already  at  the  starvation-level  for  a  certain  portion  of 
the  community,  and  below  it  for  another,  the  average 
wage  would  be  less,  the  proportion  of  bargaining  to  pro- 
ductive effort  in  the  community  would  be  greater,  and,  in 
consequence,  all  of  the  social  ills  listed  in  this  volume 
would  be  greater,  were  it  not  for  the  strike.  Therefore 
the  striking  workman  is  unquestionably  a  public  bene- 
factor. He  stands  as  did  the  Boston  Tea  Party,  in  the 
attitude  of  earnest  protest.  The  significance  of  his  imme- 
diate action  may  have  as  little  relevance  to  the  radical 
question  at  issue  as  did  theirs.  He  may  get  as  little  credit 
for  sense  or  patriotism  as  they  would  have  gotten  had  the 
War  of  Independence  failed  and  we  still  continued  subjects 
of  England's  king.  He  at  least  calls  lazy  public  at- 
tention to  the  fact  that  something  is  wrong.  By  his 
courageous,  if  blind,  stand  he  does  what  courage  al- 
ways does:  keeps  matters  from  being  worse  than  they 
otherwise  would  be.  Wasteful  and  inefficient  as  it  may 
be,  as  all  revolt  must  be,  the  strike  is  the  only  means,  out- 
side the  ballot,  which  we  have  left  in  the  hands  of  the 
wage-earner  for  maintaining  his  income.  Increased  dili- 
gence or  skill  will  not  affect  the  average  wage  one  iota. 
And  as  for  the  ballot,  it  is  the  capitalist  alone  who  has 
undermined  its  efficiency,  by  his  corruption  of  our  public 
offices  and  his  purchase  of  votes,  until  he  has  driven  labor 
from  ballot  to  strike,  until  it  has  now  become  a  fact  that 
our  best  reliance  for  the  purification  of  the  ballot  lies  in  a 
reform  of  our  economic  institutions,  rather  than  the  ballot 
Itself  being  an  effective  means  for  the  purification  of  our 
politics. 

(3)  That  the  total  cost  of  such  strikes  Is  determined, 
not  by  the  vindictiveness  of  the  contending  parties  at  all, 
but  by  the  proportion  of  barter  to  production  In  the  land. 
To  the  great  majority  of  the  readers  of  these  pages  It 


CAPITALISM    AND   LABOR  515 

may  be  said  that  they  are  individually,  in  the  prosecution 
of  their  daily  business,  doing  all  in  their  power  to  increase 
this  proportion. 

(4)  That  arbitration  is  utterly  futile  as  a  solution. 
Voluntary  arbitration  serves  the  same  purpose  as  an 
armistice  in  war:  gains  time  for  sober  second  thought  or 
for  more  thorough  armament.  In  neither  case  can  it  per- 
manently affect  the  bitterness  of  combat,  because  it  neither 
touches  nor  remedies  the  original  cause  of  combat. 
Besides,  it  is  an  attempt  to  arbitrarily  invade  the  natural 
law  stated  in  paragraph  2 ;  neither  side  is  going  to  agree 
to  arbitration  so  long  as  it  feels  that  greater  gain  can  be 
made  for  its  own  side  by  the  fortunes  of  war. 

Compulsory  arbitration  is  too  unnatural  and  incon- 
sistent a  compromise  to  ever  serve  even  a  temporary 
purpose.  It  constitutes  a  complete  reversion  from  demo- 
cracy to  despotism. 

Taking,  then,  the  strike  as  an  inevitable  institution, 
the  normal  relation  between  the  laborer  and  the  capitalist 
is  one  of  war.  Because  this  statement  may  even  now 
appear  to  be  extreme  and  untrue  it  is  to  be  supported  by 
the  following,  needing  no  qualification :  That  even  where 
the  relations  between  the  capitalist  and  the  laborer  are 
apparently  perfectly  amicable,  inherent  antagonism  of 
interests  exists;  for  antagonism  of  labor's  interests,  by  the 
extraction  of  interest  and  dividends,  is  the  sole  object  of 
the  existence  of  capitalism.  No  man  would  care  to  own 
capital  (as  distinguished  from  money)  were  he  not  per- 
mitted to  draw  interest  upon  it,  and  all  of  the  interest 
which  he  can  force  labor  to  giv^e  up  to  him,  too. 

Between  workman  and  workman  there  is  always 
naturally  harmony  and  cooperation.  Between  labor  and 
the  capital  itself,  the  inanimate  tools  which  he  uses,  is  the 


5i6  THE    COST    OF    COMPETITION 

same.  So  is  there  between  labor  and  the  consumer. 
These  naturally  harmonious  relations  are  occasionally 
broken,  of  course,  by  individual  contentiousness  or  by 
misunderstanding.  But  the  natural  relation  is  one  of 
harmony. 

Between  labor  and  the  capitalist,  however,  the  antago- 
nism is  natural  and  inevitable,  from  the  very  nature  of 
capitalism.  This  antagonism  must  not  only  naturally 
continue  to  exist  so  long  as  capitalism  exists,  but  it  is 
desirable  that  it  should.  It  is  as  natural  and  as  whole- 
some as  was  the  antagonism  between  the  colonists  and  the 
British  soldiery  in  1775.  It  would  be  equally  a  catas- 
trophe for  the  country,  in  either  case,  if  it  should  supinely 
cease.  All  hope  for  the  removal  of  the  evil  would  then 
be  gone. 

To  rightly  understand  the  problem  before  us,  and  our 
words  about  it,  there  must  again  be  brought  prominently 
to  mind  the  wholesale  distinction  between  capital  and 
capitalism.  The  capital  which  labor  needs  for  its  daily 
task  is  that  of  machines,  tools,  buildings,  etc.  With  these 
it  must  always  be  in  the  closest  and  most  harmonious  con-- 
tact  possible, — properly  much  more  so  than  is  now  the 
case.  But  of  the  capitalist  it  makes  no  use  whatever, 
nor  of  his  capitalism.  The  "  capital  "  which  the  capitalist 
recognizes  as  such,  and  which  the  public  commonly  refers 
to  as  being  such  a  boon  to  labor,  the  stocks  and  bonds  and 
similar  paper  securities,  the  mere  legal  control  of  capital, 
is  not  capital  at  all,  but  capitalism.  It  is  this  legal  control 
for  the  purpose  of  Imposing  the  tax  called  interest  which 
alone  brings  the  capitalist  into  contact  with  labor  as  its 
"  employer  "  and  with  the  consumer  as  Its  "  purveyor." 
But  the  consumer  is  the  sole  employer;  labor  is  the  sole 
purveyor.  Capitalism  has  nothing  to  do  with  either, 
except  interference.     It  Is  not  because  Mr.  J.  P.  Morgan 


CAPITALISM    AND    LABOR  517 

is  fond  of  navigation  or  takes  pride  in  increasing  his 
community's  welfare  on  the  high  seas  that  there  is  a 
steamship  "  trust."  There  is  not  a  sea-captain  afloat  suffi- 
ciently skilled  or  enthusiastic  in  his  profession  to  step 
thereby  into  Mr.  Morgan's  shoes;  the  best  of  them,  held 
responsible  for  thousands  of  souls  and  millions  of  dollars 
each  trip,  ready  to  give  up  their  lives  for  the  service  which 
they  rightly  perceive  to  be  a  public  trust,  get  $3000  per 
annum.  The  "  trust  "  exists  because  ocean-transportation 
was  at  that  particular  time  open  to  legal  control  and  con- 
solidation by  individual  initiative  for  no  other  purpose 
than  private  profit.  It  is  not  because  Mr.  Rockefeller 
"  just  loves  "  petroleum  that  he  has  amassed  the  Standard 
Oil  interests.  It  is  because  the  law  encourages  these  and 
all  gentlemen  to  sit  in  their  offices,  with  paper  securities 
in  their  hands,  never  seeing  a  steamship  or  an  oil-tank, 
and  to  wage  economic  war,  by  wire  and  by  mail,  against 
their  competitors,  their  labor  and  their  consumers,  con- 
trolling the  price  of  their  own  for  each,  that  there  are 
such  things  as  trusts.  To  confuse  the  idea  of  "  capital  " 
as  these  men  know  it,  of  mere  paper  securities  and  lawyer's 
processes,  with  that  of  "  capital  "  as  the  laborer  knows  it, 
with  the  tools  with  which  the  world's  work  is  done  and 
which  he  wields  in  doing  it,  would  be  childishly  absurd 
were  it  not  so  cruel. 

Between  labor  and  the  capitalists  who  pretend  to  be  its 
employers,  therefore,  is  naturally  and  inevitably  war,  of 
a  certain  degree  of  intensity.  For  war,  complete  enroll- 
ment and  organization  and  the  most  thorough  discipline 
are  absolutely  necessary.  For  the  first,  volunteer  action 
failing,  the  draft  has  been  relied  upon  and  excused  in 
all  lands  and  at  all  times.  The  persecution  of  non-union 
workmen  and  strike-breakers  is  simply  this ;  nothing  more. 
The  labor-unions  have  been  forced,  by  the  intensity  of 


5i8  THE    COST    OF    COMPETITION 

vertical  competition  with  capitalism,  to  eliminate  hori- 
zontal competition  between  themselves  of  a  suicidal  sort, 
to  quell  dissension  within  the  ranks,  to  adopt  drastic 
union.  In  order  to  avoid  slavery  they  compel  union.  In 
1 86 1  we  did  the  same,  even  to  the  extent  of  ample  blood- 
shed, raising  monuments  since  to  those  who  volunteered 
their  aid  in  the  compulsion,  offering  scorn  and  the  draft 
to  those  who  held  back  in  the  name  of  the  freedom  of 
the  individual  will.  Between  the  scab  and  the  copperhead 
the  difference  is  insignificant.  Strange  that  we  should  now 
regard  the  same  processes  and  attitudes  in  so  altered  a 
light!  Is  there  not  need  for  more  deliberate  reflection 
before  condemnation  of  the  union  workmen  for  the 
violent  coercion  of  those  who  belong,  by  nature  or  by 
choice,  to  the  class  which  is  struggling  for  its  existence 
and  its  rights  and  who  yet  will  not  join  in  its  defense? 
Is  there  not  need  of  reflection  upon  the  days  when  the 
question  of  union  or  no  union  was  last  before  the  people 
of  this  Republic  as  a  national  issue? 

If  the  laborer  who  refuses  to  enlist  in  the  defense  of 
his  class-rights  is  false  to  his  duty  to  his  own  especial  com- 
munity, so  is  the  capitalist  false  to  the  interests  of  capi- 
talism who  refuses  to  contest  matters  with  labor.  There 
is  not  sufficient  evidence  to  say,  broadly,  that  all  generosity 
to  labor  from  its  employers  has  led  to  an  inciease  of 
strikes;  but  there  is,  on  the  other  hand,  a  strong  prob- 
ability, with  not  the  slightest  evidence  to  the  contrary. 
The  current  instances  of  the  most  liberal  treatment  of 
operatives,  such  as  at  the  works  of  the  National  Cash 
Register  Company,  of  Dayton,  Ohio,  contribute  to  his- 
tory their  quota  of  strikes.  The  strike  is  evidence  of  dis- 
content :  sometimes  mistaken,  usually  wholesome.  Noth- 
ing will  engender  discontent  like  charity :  things  given, 
presented,  more  or  less  condescendingly,  with  the  control 


CAPITALISM   AND   LABOR  519 

always  retained  in  the  other's  hands,  although  already 
owned  by  the  recipient  by  right. 

Moreover,  the  capitalist  class  may  win  by  strikes.  The 
Individual  employer  attacked  of  course  does  not  usually 
win,  but  his  class  does.  The  capitalist  lives  upon  the 
principle  of  dog  eat  dog;  he  who  has  given  his  strength 
and  time  to  fighting  labor  nearly  always  finds,  when  he 
has  finished,  that  his  competitors  have  taken  advantage 
of  his  preoccupation  to  strengthen  their  own  position,  if 
not  to  actually  "  slit  him  up  the  back."  ^ 

But  very  often  even  the  capitalist  attacked  wins 
thereby.  The  strike  so  enhances  prices  that  he  himself 
wins  greater  profits  by  suspending  production  temporarily 
and  selling  off  his  accumulated  stock.  But  in  this  case 
he  arouses,  slowly  but  steadily,  the  only  enemy  of  whom, 
because  unorganized,  he  has  now  no  fear  but  who  alone 
really  holds  danger  for  him :  the  consumer. 

Herein  lies  the  final  proof  that  the  relations  between 
labor  and  capitalism  are  necessarily  those  of  irreconcil- 
able war,  that  the  contest  is  one  to  be  terminated  not  by 
capitulation  or  compromise  from  either  side, — that  has 
been  tried  repeatedly, — but  by  extermination,  not  of  indi- 
viduals, but  of  institutions,  of  capitalism.  There  is  no 
solvable  issue  between  capitalism  and  labor,  to  be  settled 
finally  by  arbitration  or  by  other  means.  The  issue  is  one 
between  war  and  peace.  It  is  solvable  only  by  the  sur- 
vival of  peace  over  war,  and  this  survival  is  to  be  decided 
only  by  the  sole  rightful  sovereign  of  the  industrial  world: 
the  consumer.  It  is  he  who  employs  both  employer  and 
employee;  it  Is  his  money  which  pays  all  wages  and  all 
dividends;  it  Is  he  alone  who  can  end  the  guerrilla  warfare 
between  capitalism  and  labor,  as  summarily  as  any  super- 
intendent would  quell  a  free  fight  over  the  machine-tools 

2  The    terms    win    and    lose    are   used    here    in    a   comparative,    not    an 
absolute,  sense.     The  community  as  a  whole  always  loses  by  strikes. 


520  THE    COST    OF    COMPETITION 

in  his  own  shop.  As  surely  as  history  repeats  itself  most 
of  us  now  living  shall  see  ourselves,  every  one  of  us, 
consumers  all,  drafted  by  constitutional  law  Into  Indis- 
soluble union  with  these  same  trades-unionists  and  capital- 
ists, millionaires,  walking-delegates  and  tramps,  into  an 
organization  coincident' with  the  limits  of  American  citi- 
zenship, for  the  primary  purpose  of  abolishing,  in  law 
and  in  fact,  that  civil  strife  which  may  all  be  Included 
under  the  name  of  barter. 

That  the  demand  for  this  abolition  Is  already  upon  us, 
voiced  In  no  uncertain  tone,  from  a  million  different 
throats.  In  a  thousand  different  ways,  confusedly,  seeing 
but  dimly  the  proper  substitute  or  the  ways  and  means, 
seeing  all  too  keenly  the  vital  need  for  one,  It  were  well 
for  the  prudent  now  to  recognize.  The  demand  is  unan- 
swerable. Homoeopathic  remedies,  curing  competition 
with  competition ;  temporary  stimulants,  in  the  way  of 
tariffs  and  subsidies;  vain  compromises  with  evil,  of  gov- 
ernmental commissions  or  public  control: — compare  the 
utmost  which  they  may  hope  to  accomplish  with  the  mag- 
nitude, the  power,  the  ubiquity,  the  supremacy  of  barter! 
They  avail  but  to  delay  the  issue,  aggravating  It  mean- 
while. They  in  no  wise  aid,  they  fearfully  hinder,  Its 
settlement.  It  is  neither  the  disease  nor  the  cure  which  Is 
going  to  be  the  most  expensive  to  the  community;  It  is 
the  present  cowardly  delay  in  sober  diagnosis  and  in 
prompt  attack. 

That  Is  all  there  really  Is  to  the  ethics  of  employer  vs. 
employee.  That  each  should  wage  his  war  broad-mindedly 
is  of  course  desirable.  But  whether  one  or  the  other  be 
wrong  in  any  particular  case  matters  nothing  at  all,  In 
the  long  run.  These  battles  between  capitalism  and  labor 
are  exactly  like  the  wars  of  the  Middle  Ages:  intermin- 
able, Indecisive,  accomplishing  apparently  nothing  at  all; 


CAPITALISM    AND   LABOR  521 

accomplishing  really  the  all-important;  the  elimination  of 
the  idea  that  the  interests  of  a  minority  are  to  take  pre- 
cedence over  those  of  the  country  as  a  whole,  or  that 
fighting  over  them  at  all  furthers  matters.  In  past  his- 
tory when  that  was  done,  when  England  had  become  Eng- 
land and  France  France,  then  came  the  renaissance. 
Only  when  a  certain  degree  of  political  unity  had  been 
attained  could  individuality  arise.  Then  the  known  world 
opened,  in  a  century,  to  twenty  times  its  previous  expanse, 
geographically  and  metaphorically.  So  shall  it  be  in  this 
second  renaissance,  now  almost  upon  us,  when  it  is  finally 
discovered  that  fighting  over  private  profit  does  not  pay; 
when  the  consumers  find  that  the  nation  is  a  unit,  after  all, 
not  to  be  distracted  by  schism  into  factions  with  opposing 
pecuniary  interests,  and  that  they  are  it.  Things  happen 
more  quickly  now  than  they  did  then;  a  decade  of  the 
second  renaissance  will  enlarge  our  vision  more  than  did 
a  century  of  the  first. 

So  it  matters  nothing  at  all  how  employer  regards 
employee,  or  vice  versa.  But  it  matters  everything  in  the 
world,  for  the  fate  of  the  nation  hangs  thereon,  how  the 
consumer  looks  on  and  regards  this  fight  over  his  bus- 
iness with  his  money.  The  capitalist,  for  one,  has  no 
right  to  sympathy.  He  is  fighting  for  life,  to  be  sure, 
but  for  a  life  of  luxury  and  in  a  fight  purely  of  his  own 
making.  Men  of  his  class,  which  nullifies  the  effective- 
ness of  the  ballot  by  campaign-contributions,  by  the  reten- 
tion of  a  lobby  or  of  "  influence,"  or  by  bribery,  can  find 
little  ground  for  complaint  when  the  oppressed  turn  from 
the  ballot  to  the  strike,  to  the  boycott  or  to  revolt  for 
relief.  So  award  the  sympathy,  if  sympathize  you  must, 
to  the  men  who  are  fighting  for  life  itself,  in  a  fight  not 
of  their  own  making.  But  place  your  judgment  and  your 
ballot  against  the  entire  fighting  plan,  against  all  barter 
as  a  legalized  national  institution. 


VII 
FUTURE  PROGRESS  WITHOUT  POVERTY 

HITHERTO  these  pages  have  been  devoted  to  the 
analysis  of  existing  facts.  It  has  been  no  pur- 
pose of  this  book  dogmatically  to  predict  future 
evolution,  except  as  it  may  become  obvious  from  a  study  of 
the  forces  which  are  at  present  molding  society  into  what 
we  find  it  to  be. 

This  attitude  is  necessary  primarily  because  one  of  the 
fundamental  popular  errors  in  regard  to  social  evolution 
is  that  it  exists  only  as  a  result  of  previous  individual  evolu- 
tion, and  therefore,  that  any  attempt  at  Its  furtherance  by 
deliberate  alteration  of  social  Institutions  is  either  futile, 
If  unaccompanied  or  preceded  by  such  individual  develop- 
ment, or  is  unnecessary  if  so  accompanied;  In  short,  as  Is 
frequently  asserted,  that  "  you  cannot  legislate  people 
good." 

If  the  reader  of  the  preceding  analysis  has  perceived 
aught  of  general  sociological  principle  between  the  lines, — 
or  In  them,  for  that  matter,  for  there  has  been  no  desire 
to  conceal, — he  has  perceived  long  ere  now  that  the  book 
stands  for  the  directly  opposite  view  from  this:  that  It 
both  rests  upon  and  supports  the  general  evolutionary  law 
that  each  form  of  life  is  created  by,  not  creative  of,  Its 
environment;  although  the  reaction  from  its  growth  may 
subsequently  affect  its  molding  environment.  Hence, 
there  is  no  hope  of  altcring^  Jiiiman  individuals  until  you 

522 


FUTURE    PROGRESS   WITHOUT    POVERTY      523 

first  alter  man's  most  active  environment :  the  artificial 
institutions,  customs  and  laws  through  which  he  is  related 
to  other  men,  which  he  himself  has  created  and  which  he 
alone  can  modify  or  destroy. 

For  instance,  it  is  commonly  said  of  the  plan  for  equally 
dividing  all  wealth  between  all  individuals  (which  no  sane 
person  has  ever  proposed),  and  in  proof  of  the  power  of 
individual  greed  over  the  distribution  of  wealth,  that  the 
result  of  human  nature  in  contact  with  such  premises  would 
be  to  regain  promptly  the  present  inequality  of  distribu- 
tion. That  is  true,  /'/  existing  institutions,  including  bar- 
ter, were  to  remain  unchanged.  But,  what  is  more  impor- 
tant, that  statement  can  be  rigidly  paralleled  by  this  one, 
also  true,  because  the  dependency  of  individual  physiog- 
nomy upon  environment  is  complete :  If  all  the  individ- 
uals of  the  world  were  suddenly  transformed  into  perfect 
angels,  yet  still  subject  to  worldly  organic  law,  and  pro- 
vided that  their  angelic  dispositions  found  no  expression 
in  the  alteration  of  existing  institutions,  inside  of  one  or 
two  generations  the  distribution  of  individual  morality  and 
intelligence  would  be  just  what  it  is  to-day. 

It  is  no  strange  statement  in  evolutionary  law  that  a 
form  of  life  too  highly  developed  to  harmonize  with  its 
environment  will  degenerate  into  equilibrium  with  it,  or 
else  become  extinct;  as  easily,  and  more  so,  than  a  form  of 
life  too  low  for  its  environment  will  develop  to  or  be  sur- 
vived by  one  more  highly  fit.  Equilibrium  Is  attained  by 
degeneration  down  to  fitness  to  survive  when  the  environ- 
ment is  more  primitive  than  the  existing  life,  just  as  much 
as  it  is  by  growth  upwards  Into  fitness  to  survive  when  the 
environment  Is  more  advanced  than  the  existing  life. 
Indeed,  the  former  is  the  easier  process. 

At  present  the  institutional  environment  of  civilized 
existence  is  far  more  primitive  and  rudimentary  than  Is  the 


524  THE    COST    OF    COMPETITION 

life  which  springs  up  amidst  it  and  degenerates  down  to  it 
or  dies.  Our  institutional  environment  consists  of  a  mixture 
of  Phoenician  commerce,  Roman  law  and  medieval  feudal- 
ism. Not  a  single  portion  is  modern,  no  part  has  been 
deliberately  designed  by  the  intelligence  to  accomplish  its 
purpose,  except  our  plan  of  political  representation;  and 
the  outlet  which  this  last  has  offered  for  growth  in  one 
direction  for  over  a  century  is  just  what  has  made  so  pain- 
fully evident  to  our  sensibilities  our  incarceration  in  other 
directions. 

Such  a  degeneration  as  that  just  supposed  to  take  place 
in  a  world-population  of  angels  would  consist  of  nothing 
more  than  being  "  legislated  bad."  Our  imperfect  human 
statutes  and  the  unnatural  relationships  which  they  enforce 
would  throw  too  many  economic  obstacles  in  the  way  of 
the  survival  of  the  true  angels  and  would  offer  too  favor- 
able a  chance  of  survival  to  the  sporadic  degenerates 
exhibiting  traces  of  selfishness;  for  to  the  most  selfish  these 
statutes  allot  the  maximum  material  prosperity.  This 
process  of  legislating  people  poor  and  bad  is  so  extremely 
active  to-day  that  this  book  has  been  devoted  to  an  esti- 
mate of  the  extent  of  current  human  want,  wickedness  and 
sorrow  for  which  it  is  responsible.  Therefore  it  is  axio- 
matic to  place  in  the  premises  of  our  economic  synthesis  the 
statement  that  just  so  far  as  we  found  that  any  institu- 
tion, such  as  barter,  legislates  people  poor,  its  reversal  or 
abolition  will  legislate  them  Into  competence  and  comfort. 
Our  ethical  synthesis  will  be  built  upon  the  similar  moral 
that  just  so  far  as  barter  artificially  induces  people  to  be 
wicked,  its  abolition  by  law  will  truly  "  legislate  them 
good." 

No  skeptical  worshiper  of  the  supremacy  of  the  indi- 
vidual soul  need  reject  this  proposition.  The  supreme 
soul  is  subject  on  earth  to  limitation  by  earthly  surround- 


FUTURE    PROGRESS    WITHOUT    POVERTY      525 

ings.  This  "  legislating  it  good  "  is  not  forcing  it  to  be 
good;  it  is  merely  permitting  it  to  be  good,  to  grow  into 
goodness,  by  forcibly  preventing  the  wicked  from  slaying 
its  body, — whereupon  it  proves  its  divine  origin  by  grow- 
ing better  and  better  on  earth  instead  of  in  heaven.  No 
agnostic  worshiper  of  Natural  Law  need  reject  It  either. 
It  merely  urges  the  modification  of  our  now  faulty  statutes 
into  coincidence  with  the  natural  law  of  all  human,  as 
well  as  all  inanimate,  relations:  mutual  gravitation  Into 
cooperation  and  unity  of  method. 

In  short,  it  is  plain  that  if  these  antagonistic  and  de- 
structive institutions  of  ours  can  be  abolished.  If  the  natural 
human  gravitation  toward  cooperation  and  specialization 
can  be  freed,  if  conditions  can  be  maintained  which  will 
ensure  the  operation  of  the  Law  of  Increasing  Returns, 
the  supply  of  the  necessaries  of  life  will  increase  more 
rapidly  than  the  population;  the  race  will  prosper  and 
progress  In  geometric  ratio  as  It  multiplies.  This  Is  quite 
in  accord  with  natural  law  and  with  human  hopes.  The 
Creator  shows  plainly.  In  a  thousand  ways,  that  man  was 
not  placed  upon  earth  to  enjoy  Idle  ease  and  freedom  from 
pain.  He  has  shown  just  as  plainly,  and  has  Implanted  at 
the  very  bottom  of  the  human  heart  the  recognition  of  the 
fact.  In  the  form  of  a  hope  that  never  dies,  that  man  Is  not 
here  condemned  to  a  struggle  with  the  elements  so  futile 
that  with  the  physical  comfort  which  he  seeks  In  vain  Is 
also  lost  that  faith  In  man  and  God  which  alone  can  melt 
pain  away  Into  paradise.  What  bodily  pain  we  feel  may 
come  from  either  man  or  God;  but  the  torture  of  the  soul 
which  far  surpasses  that,  the  sting  of  malice,  of  Injustice 
or  of  Ingratitude,  the  bitterness  of  Gethsemane,  comes 
alone  from  the  cruelty  of  man  to  man. 

This  Ignorant  Injustice,  In  our  economic  studies,  distills 
down  to  a  residue  of  rigid  formulae.    It  Is  when  these  con- 


526  THE    COST    OF    COMPETITION 

ditions  which  ensure  the  operation  of  the  Law  of  Increas- 
ing Returns  are  neglected,  it  is  only  when  antagonism  is 
artificially  forced  upon  the  masses,  in  pure  ignorance  or 
in  unenlightened  selfishness,  that  the  growths  of  popula- 
tion, prosperity  and  civilization  alike  are  stunted.  Then 
does  the  "  surplus  population,"  grim  jest  upon  the  deficit 
in  population,  upon  the  unborn  increase  which  should  have 
been  but  could  not  be,  make  itself  known, — the  skeleton 
guest  at  the  nation's  wedding-feast.  "  War,  pestilence  and 
famine "  offer  their  heroic  remedies,  prescribed  in  the 
name  of  innocent  Malthus.  Crime,  insanity  and  suicide, 
the  modern  representatives  of  this  famed  family  of  execu- 
tioners, set  feverishly  to  work,  under  the  inspiration  of 
their  ancestors,  to  clean  the  Augean  stables  of  the  race  of 
this  quivering  surplusage  of  human  refuse, — which  enters 
and  accumulates  by  the  barter-window  faster  than  it  can 
be  heaved  out  at  the  door  by  the  most  strenuous  exertions 
at  production,  at  charity  or  at  extermination. 

These  conditions  essential  to  increasing,  or  even  con- 
tinued, prosperity  are : — 

( 1 )  Specialization,  so  far  as  productive  industry  is 
concerned,  to  the  last  degree; 

(2)  C06RDINATIO.N  the  same. 

For  complete  specialization  are  needed: 

(a)  Diversity  and  interdependence  of  the  departments 
of  industry ; 

(b)  Ideal  opportunity  for  education  and  invention; 

(c)  Complete  political  and  personal  liberty; 

(d)  Perfect  return  to  the  individual  of  the  value  which 
he  produces. 

For  perfect  coordination  is  needed: 

(e-z)    Complete  unity  of  material  interests. 

Of  diversity  and  interdependence  of  the  departments  of 


FUTURE    PROGRESS    WITHOUT    POVERTY     527 

industry  we  now  have  more  than  we  have  of  any  of  the 
others.  Their  furtherance  is  the  work  of  applied  science 
and  invention.  Each  step  in  that  work  multiplies  the 
instances  in  which  the  by-product  of  one  industry  be- 
comes the  raw  material  of  another,  so  that  enterprises 
which  were  before  totally  independent  and  uncommuni- 
cative are  now  forced  into  some  form  or  other  of  cooper- 
ation. 

Of  opportunity  for  education  and  invention  we  have  a 
fair  amount.  All  that  generosity  and  scientific  interest  on 
the  part  of  the  wealthy  can  do  is  being  done.  But  very 
much  more  than  that  is  needed:  the  more  liberal  main- 
tenance of  the  students  themselves;  and  that  the  generous 
cannot  give  without  pauperizing  them,  which  is  worse 
for  them  than  the  lack  of  education. 

Of  political  and  personal  liberty  we  have  yet  even  more. 
We  have  not  so  much  as  we  think  we  have,  but  we  have 
nearly  enough  for  present  purposes.  With  the  advent  of 
the  initiative  and  referendum,  and  of  minority-representa- 
tion, little  more  can  be  asked  for. 

.  It  is  when  the  next  class  of  needs  is  taken  up  that  the 
lack  appears.  Although  of  coordination  we  have  a  great 
deal,  of  unity  of  interests  we  have  almost  none.  Every 
bit  of  factory-organization  throughout  the  land  consists  of 
the  coordination  of  labor  to  a  single  end.  The  trouble  is 
that  that  end  is  not  the  interests  either  of  society  as  a 
whole  or  of  the  laboring  body  as  a  class;  it  is  the  interests 
of  a  set  of  barterers  and  capitalists  who  control  and  direct 
the  coordinated  organization  for  the  most  efficient  produc- 
tion, not  of  the  goods  which  society  wants,  nor  of  the 
wages  which  labor  wants,  but  of  the  net  profits  which  the 
barterers  want.  It  is  the  height  of  absurdity,  or  of  worse, 
for  practical  business-men,  knowing  what  they  are  talking 
about  to  speak  of  the  interests  of  capitalism  and  labor  as 


528  THE    COST    OF    COMPETITION 

being  identical.  They  know  perfectly  well  that  all  com- 
mercial success  consists  of  keeping  down  the  rate  of  wages, 
which  enter  into  costs,  and  of  keeping  up  the  price  to  the 
consumer,  as  the  only  means  of  getting  a  maximum  mar- 
gin of  profit.  It  is  equally  absurd,  although  not  so  repre- 
hensible, for  them  to  contend  that  only  by  working  in  har- 
mony can  capitalism  and  labor  find  anything  to  do. 
Capital, — material  capital,  of  buildings,  tools,  etc., — and 
labor  work  in  perfect  harmony  now,  and  always  have  done 
so.  It  is  only  capitah'iw  which  is  in  contention  with 
labor. 

The  reason  why  contention  exists  is  because  the  competi- 
tive wage-system  relies  upon  its  presence  for  the  settlement 
of  that  ever-present  question,  the  current  rate  of  wages,  and 
emphatically  refuses  to  rely  upon  anything  else.  The  only 
reason  why  labor  has  any  trouble  in  finding  anything  to  do, 
any  capital  to  work  with,  is  because  capitalism  cuts  off  the 
purchasing-power  of  the  consumer.  The  sooner  capitalism 
fails  to  find  a  basis  for  further  existence  at  all  the  sooner 
will  labor  find  its  first  freedom  to  cooperate  with  capital, 
and  the  better  off  will  be  the  laborer,  the  consumer  and 
society  as  a  whole. 

The  man  who  denies,  or  even  neglects,  these  fundamen- 
tal facts  of  competitive  commerce  in  his  arguments  about 
industrial  affairs  forces  his  hearers  into  the  painful  task  of 
classing  him  as  either  shallow  or  insincere.  The  facts 
are  patent  enough.  The  interests  of  the  several  economic 
classes  and  the  myriads  of  parties  to  modern  business  are 
hopelessly  antagonistic.  It  is  the  business  of  "  business  " 
to  have  them  so.  Every  move  of  the  directors  of  industry, 
every  "  scoop  "  of  a  rival,  every  victory  won  over  a 
strike,  every  franchise  secured,  every  law  passed  in  the 
interests  of  the  profit-seekers,  but  widens  and  deepens  the 
gap  between  them, — and   incidentally  makes  commercial 


FUTURE    PROGRESS    WITHOUT    POVERTY     529 

negotiation  the  more  remunerative  because  the  more  diffi- 
cult. Nor  will  the  abyss  be  bridged  by  saying  that  it 
does  not  exist.  The  gulf  will  be  spanned  only  at  the 
cost  of  a  complete  revolution  of  our  present  industrial 
policy. 

This  gulf  is  nothing  more  than  the  lack  of  unity,  the 
enforced  antagonism,  between  every  man  and  his  com- 
petitor in  business.  In  each  individual  case  it  seems  a 
minute  thing.  Integrated  to  the  limits  of  the  nation  it 
becomes  a  national  calamity.  It  is  this  which  makes  of 
our  commerce  one  vast  civil  war:  every  man's  hand  raised 
against  his  neighbor.  It  is  this  which  enslaves  us  indus- 
trially, employer  and  employee  alike,  despite  our  vaunted 
political  liberty.  It  is  this  unnatural  gulf  which  forces 
us  to  legislate  constantly  to  its  support,  that  it  shall  not 
sink  into  formless  chaos  from  mere  inherent  instability, 
legislating  ourselves  at  the  same  time  both  poor  and 
wicked.  It  is  this  great  Sunken  Way,  of  devious,  hidden 
profit-search,  into  which  is  constantly  pouring  our  best 
life  and  strength  at  gallop-pace,  threatening  outwardly  to 
make  of  our  national  conquest  of  this  virgin  continent  and 
Its  riches  a  final  Waterloo  for  occidental  progress  and 
civilization. 

The  Abolition  of  Economic  Dissipation.  There- 
fore will  it  sharpen  our  perception  of  this  hidden  pitfall, 
of  these  complex  as  well  as  obscure  social  reactions,  if, 
after  the  previous  analytical  review  of  their  present  con- 
formation, we  pass  on  to  the  future  and  consider  the  effect 
of  their  supposititious  removal.  In  doing  so  it  were  wise 
to  define  carefully  the  premises  for  advance,  as  follows. 
We  shall  assume: 

( I )  That  in  the  prosecution  of  industrial  life  all  indi- 
viduals are  guided  solely  by  their  selfish,  material  interests, 
with  no  altruistic  or  patriotic  regard  for  their  country's 


530  THE    COST    OF    COMPETITION 

interests  nor  any  appreciation  of  its  reward  of  fame  and 
honor  therefor.^ 

(2)  That  wherever  a  commodity  is  offered  for  sale  at 
the  cost  of  production  only,  it  will  be  impossible  for  that 
same  commodity  to  find  a  continuous  market  when  offered 
at  the  higher  price  of  production  plus  a  profit;  hence, 
that  no  artificial  compulsion,  necessarily  incomplete  in  Its 
enforcement,  need  be  relied  upon  to  abolish  barter  if  the 
natural  principle  of  sale  at  the  cost  of  production  be 
adopted  and  incorporated  into  public  law  and  opinion. 
In  other  words,  referring  to  the  two  Divisions  of  Industrial 
and  commercial  activity  tabulated  on  pages  142  and  143, 
it  is  proposed  to  totally  eliminate  Division  II,  in  the  fu- 
ture, so  that  the  price  at  which  each  commodity  Is  sold  shall 
be  made  up  of  the  items  of  Division  I  alone. 

3.  That  the  sole  guiding  principle  of  economic  justice 
is  to  be  the  cousercation  to  each  iudh-idiial  of  the  laUie 
•zvJiicJi  he  produces. 

The  attainment  of  this  last  principle  would  obviously 
leave  not  only  the  sick,  the  insane  and  the  criminals  as 
paupers  upon  the  public  hands,  as  they  are  now,  but  all  the 
other  non-producers  as  well :  the  orphans,  the  aged  and 
infirm,  and  that  minority  of  healthy  adult  women  who 
have  not  been  educated  Into  productive  Industrial  habits. 

1  This  stand  is  taken  in  the  premises  because,  in  regard  to  the  future, 
the  writer  wishes  his  present  predictions  to  be  based  upon  no  ethical 
assumptions  whatever,  to  be  open  to  no  indictment  for  weakness  from 
idealism.  He  does  not  believe  that  this  supposition  truly  and  broadly 
applies,  either  now  or  in  this  supposititious  future;  but  for  the  present  he 
wishes  to  be  cold-blooded  and  "  practical."  In  regard  to  the  selfishness 
of  existing  conditions,  all  that  he  has  said  is  that  of  all  the  impulses, 
selfish  and  unselfish,  which  are  felt  by  human  nature,  the  competitive 
economic  system  (so  far  as  material  prosperity  or  the  lack  of  it  can  avail) 
sustains  and  encourages  all  the  selfish  ones  and  starves  and  discourages 
all  the  unselfish  ones.  All  that  he  wishes  to  bring  out  at  present  is  the 
obverse  of  this:  that  the  abolition  of  barter  will  sustain  and  encourage  the 
unselfish   and   tend  to  exterminate  the  selfish. 


FUTURE    PROGRESS    WITHOUT    POVERTY     531 

Whether  they  are  to  be  cared  for  by  public  appropriation 
or  by  private  subscription,  or  the  ethical  effects  of  either 
upon  the  community,  is  for  the  present  to  be  eliminated 
from  the  discussion.  This  present  synthesis  is  to  be  pro- 
jected from  the  cold-blooded  premises  delighted  in  by  the 
"  practical  business-man,"  viz. : 

(a)  Universal  selfishness:  "Ever)'  man  for  himself 
and  the  devil  take  the  hindmost  "; 

(b)  To  each  man  the  value  which  he  produces. 

But  It  is  to  be  understood  at  the  start,  as  incidental  and 
essential  to  this  last,  and  as  these  same  practical  men  very 
inconsistently  omit  from  their  premises,  that  the  lazvs  of 
the  land,  hacked  by  public  opinion,  shall  prohibit  any  man 
from  atteynpting  to  take  from  either  laborer  or  consumer 
any  portion  of  the  value  ivhich  the  latter  has  produced. 
The  efforts  of  each  man  in  his  own  behalf  must  be  exerted 
against  nature,  not  against  man. 

This  is  to  be  accomplished  by  the  enforcement  of  these 
following  statutes : 

I.  That  each  man's  produce,  be  it  what  it  may,  must 
be  sold  at  cost  to  the  community  as  a  zihole,  represented 
by  its  public  agent,  and  to  the  community  only;  in  other 
words,  that  the  legal  ownership  of  all  value  produced 
within  the  community  shall  be  vested  as  completely  in  its 
Central  Office  as  is  now  the  case  within  every  factory. 
The  community  must  guarantee  to  each  producer  the  full 
value  of  his  efforts,  and  to  itself  the  most  perfect  free- 
dom of  exchange.  Those  are  the  sole  duties  of  civilized 
Exchange.  The  only  known  method  of  meeting  them  is 
that  of  the  public  Central  Office,  fixing  prices  at  a  money- 
rate  determined  by  a  pure  balance  between  supply  and 
demand,  as  free  from  barter  as  Is  the  purchase  of  postage- 
stamps.  The  community  must  also  prohibit  any  attempt 
upon  the  part  of  any  individual  at  acquiring  Value  by 


532  THE    COST    OF   COMPETITION 

any  other  means  than  by  producing  it.  This  last,  at 
present,  it  does  not  pretend  to  do.  Yet  it  is  a  policy  the 
justice  of  which  the  most  ambitious  profit-seeker  cannot 
publicly  decry. 

2.  That,  as  the  only  means  necessary  to  enforce  the 
preceding,  all  prices,  whether  of  commodities,  of  manual 
labor  or  of  intellectual  service,  must  he  publicly  fixed  and 
publicly  varied,  and  not  subject  to  private,  Individual  ma- 
nipulation.    They  are  to  be  fixed,  naturally, 

{a)  By  public  officials,  acting  publicly  upon  current 
public  records,  such  as  the  census-bulletins;  all  ledger- 
accounts,  bank-accounts,  check-books,  etc.,  being  consid- 
ered at  all  times  public; 

{b)  So  that  the  price  just  equals  the  cost;  that  is,  so 
that  the  commodity  in  question  shows  as  little  deficit  or 
surplus  of  cash,  from  year  to  year,  as  possible; 

(c)  So  that  the  volume  of  supply  shall  be  similarly 
adjusted  to  meet  the  volume  of  demand,  so  that  as  little 
deficit  or  surplus  of  goods  as  possible  shall  occur. 

The  Natural  Wage.  It  Is  to  be  noted.  In  passing, 
that  the  last  two  subheads  In  combination  amount  to  the 
fixation  of  the  price  of  labor  selecting  specialization  upon 
that  particular  commodity.  That  is  to  say,  the  daily  wage 
for  a  certain  grade  of  labor  being  the  same  for  all  com- 
modities, as  would  naturally  be  so,  the  superintendent  of 
the  production  of  each  commodity  would  so  arrange  the 
hours  and  conditions  of  work  as  to  attract  labor  to  that 
service  when  more  goods  were  in  demand,  or  vice  versa; 
which  amounts  to  exacting  less  or  more  work  per  dollar. 
This  process  is  the  natural  operation  of  balance  of  Supply 
and  Demand.  It  is  the  process  now  relied  upon,  exclu- 
sively of  all  others,  in  the  employment  of  labor  to  supply 
the  demand  felt  by  the  factory.     To  supply  the  demand 


FUTURE    PROGRESS   WITHOUT    POVERTY      533 

felt  by  the  consumer,  however,  this  balance  is  in  action 
to-day  only  obscurely  and  fractionally,  owing  to  the  pres- 
ence of  barter.     Then  it  would  have  full  swing. 

This  is  the  general  policy  of  the  post-office,  for  instance, 
in  its  relations  with  public  demand.  In  its  relations  with  its 
employees  it  is  forced,  by  the  competitive-wage  system, 
into  exact  parallelism  with  all  other  employers.  There- 
fore, while  it  offers  an  excellent  example  of  the  Natural 
Price  to  the  consumer,  it  gives  no  hint  of  what  may  be  the 
Natural  Wage  for  the  labor  in  its  employ. 

The  Comparative  Cost  of  Public  and  Private 
Work.  At  this  point  in  the  argument  naturally  arises 
this  most  voluminous  question.  Into  the  maze  of  statistics 
which  it  involves  we  shall  not  plunge  here.  Following 
the  underlying  idea  of  the  work,  which  is  to  reveal  clearly 
the  relationship  of  cause  and  effect  between  facts  already 
well  known  or  easily  ascertainable,  rather  than  to  pile  up 
novel  and  undigested  facts,  we  shall  confine  ourselves  to 
some  general  considerations. 

In  comparing  the  public  with  the  private  organization 
of  industry  there  is  no  objection  to  admitting  at  the  start, 
if  it  could  be  of  any  satisfaction  to  the  advocates  of  pri- 
vate methods,  that  the  cost  to  the  organization  itself  is 
probably  greater  under  public  than  under  private  organiza- 
tion. But  the  fundamental  difference  is  that  under  public 
organization  the  directorate  and  the  consumer  are  one, 
whereas  under  private  initiative  they  are  not.  In  the 
latter  case  the  cost  to  the  organization  and  the  price 
demanded  of  the  consuming  public  are  so  very  different. 
So  this  much  must  be  said  her^,  as  the  lesson  to  be  learned 
before  any  intelligent  use  of  statistics  may  be  made  what- 
ever, that  if  all  the  "  costs  "  which  are  ordinarily,  legally 
and  legitimately  charged  against  the  placing  of  a  thing 


534  THE    COST    OF    COMPETITION 

upon  the  competitive  market  by  private  enterprise, — 
including  rent,  interest,  dividends,  profit,  competitive  ad- 
vertising, legal  counsel  and  the  other  "  costs  of  doing  bus- 
iness,"— are  to  be  charged  in  against  the  public  organiza- 
tion for  the  same  service,  then  there  is  no  reason  what- 
ever for  prefering  the  public  to  the  private  policy.  So 
long  as  profits  are  made,  by  charging  the  consumer  more 
than  the  bare  cost  of  supply,  those  profits  will  inevitably 
be  exaggerated  and  inevitably  stolen.  So  long  as  interest 
and  rent  are  regarded  as  properly  to  be  charged  and  col- 
lected, they  will  be  inflated  to  the  last  degree  by  the 
monopoly  of  land-control  and  by  the  "  watering "  of 
stock.  So  long  as  combative  advertising  and  self-seeking 
litigation  are  rewarded,  as  aids  to  the  above,  by  an  expan- 
sion of  income,  the  greed  and  contentiousness  of  human 
nature  will  develop  them  into  the  degree  of  a  frenzy. 
Whether  organized  in  the  name  of  the  entire  state  or  in 
the  name  of  a  fraction  of  the  community  only,  will  make 
not  the  slightest  difference  as  to  the  result.  In  either  case 
the  organization  will  soon  gravitate  into  the  hands  of  men 
of  the  ward-politician  and  financial-promoter  class, — for 
they  are  one.  The  individual  producer,  the  individual  con- 
sumer and  the  common  stock-holder  will  be  alike  the  help- 
less losers,  and  the  coterie  of  bosses  will  be  the  gainers. 
In  the  one  case  the  methods  of  these  bosses  will  be  politi- 
cal; in  the  other  they  will  be  commercial.  But  the  result 
will  be  the  same.  Prices  will  run  high,  and  service,  in 
point  of  both  quantity  and  quality,  will  run  low.  Idleness, 
both  enforced  and  voluntary,  will  be  common.  Corrup- 
tion, both  public  and  private,  will  run  rife.  Not  until  the 
interest-account,  the  dividend-account,  the  secret-salary 
account  and  the  "  cost-of-doing-business  "  account  are  cut 
out  of  the  cost-ledger  entirely, — absolutely  by  public 
opinion  and  the  common  law,  and  actually  to  what  degree 


FUTURE    PROGRESS   WITHOUT    POVERTY      535 

these  may  be  effective, — will  these  phenomena  disappear. 
Then,  again,  it  will  appear  that  it  makes  slight  differ- 
ence, as  to  the  results  attained,  whether  the  organiza- 
tion be  public  or  private.  The  liquor-systems  of  Gothen- 
burg and  other  places,  for  instance,  organized  and 
capitalized  privately,  but  operated  without  attempt  at  a 
profit,  as  a  public  trust,  have  proven  almost  as  effec- 
tive for  the  suppression  of  all  the  evils  of  liquor-traffic  as 
could  any  similarly  operated  public  organization.  Only 
it  is  unimaginable  that  any  private  organization,  isolated 
in  its  methods  from  all  of  its  neighbors,  could  or  would 
arise  and  be  operated  upon  this  non-profit-seeking  plan 
upon  a  scale  effective  for  the  solution  of  our  national  prob- 
lems. It  is  quite  imaginable  that  a  public  organization 
both  could  and  would  do  so;  for  the  organization  exists 
in  readiness,  needing  only  its  deliberate  direction  toward 
this  work.  That  is  almost  the  whole  of  the  controversy 
between  public  and  private  ownership  or  operation.^ 

The  reminder  which  has  just  been  made,  that  the  sav- 
ing in  internal  cost,  in  the  case  of  private  enterprise,  is  of 
little  interest  to  the  community  because  of  the  lack  of  its 
identity  with  the  price  asked  of  the  consumer,  together 
with  our  long  portrayal  of  the  rate  at  which  their  differ- 
ence— barter-cost  plus  profit-tax — have  grown  to  outra- 
geous proportions,  ought  to  settle  this  question  of  compara- 

2  There  is  another  feature  of  this  comparative  cost-of-service  question 
which  is  worthy  of  mention  in  passing.  This  is  the  common  habit  of  ignor- 
ing the  evidence.  For  instance,  the  common  attitude  of  mind  in  regard  to 
governmental  work  is  that  "of  course"  it  costs  more  than  private  work; 
yet  the  evidence  which  should  lie  back  of  this  attitude  I  have  never  been 
able  to  find.  What  is  offered  usually  melts  upon  examination.  But  more 
often  none  is  offered  or  asked  for.  "  Everybody  knows  that! "  is  passed 
and  accepted  as  sterling  wisdom.  Here  is  an  instance.  One  of  the  daily 
journals  of  New  York  which  stands  with  the  topmost  in  reputation  for 
ability,  and  upon  which  I  myself  rely  daily  as  the  best  newspaper  in  the 
land,  is  uniformly  bitter  in   its  editorial   attitude   toward   all   which  these 


536  THE    COST    OF    COMPETITION 

tive  cost.  If  not,  it  ought  at  least  to  reopen  it  so  widely 
as  to  amount  to  the  same  thing.  Nevertheless,  it  is  worth 
while  to  examine  more  at  length  the  common  statement 
that  a  barterer,  seeking  only  his  own  gain,  can  hire  and 
direct  a  superintendent  or  a  laborer  very  much  more  effi- 
ciently than  can  a  salaried  agent  of  the  community  hire 
the  same  man  to  do  the  same  thing;  and  therefore  that, 
although  commodities  may  be  offered  by  public  agents  at 
the  cost  of  production,  private  barterers  will  still  be  able 
to  offer  the  same  articles  at  a  lower  price  and  have  margin 
of  profit. 

The  reply  to  this  is  threefold: 

( I )  It  does  not  seem  probable  upon  the  face  of  it. 
There  is  no  visible  reason  why  production  can  be  superin- 
tended any  more  efficiently  under  one  plan  than  another. 
The  pure  superintendent  has  a  much  greater  incentive  to 
efficiency  in  the  case  of  public  than  of  private  control.  As 
to  the  barterer,  while  he  plainly  experiences  an  induce- 
ment to  effort  under  private,  profit-making  organization 
of  a  sort  which  finds  no  place  under  public  organization, 
it  is  not  an  inducement  to  productive  effort,  lowering  costs 
and  prices  at  all;  it  is  an  inducement  totally  to  neglect 
productive  processes,  relegating  them  to  the  care  of  his 

pages  advocate.  Incidentally,  however,  it  prints  the  following  in  its  edi- 
torial columns: 

"  A  Startling  Contrast. — A  disclosure  just  made  to  Congress  should 
have  results.  It  appears  that  the  battleship  Connecticut,  built  directly  by 
the  government  at  the  Brooklyn  navy-yard,  was,  at  the  end  of  September, 
practically  just  as  far  advanced  as  was  her  sister-ship,  the  Louisiana, 
under  construction  by  a  private  company  at  Newport  News.  The  Connec- 
ticut had  cost  $2,234,937.  The  Louisiana  had  cost  $3,548,250.  The  appar- 
ent saving  in  cost  by  direct  governmental  construction  is  thus  $1,213,313. 

"  This  difference  is  enormous,  amounting,  as  it  does,  to  more  than  50 
per  cent,  of  the  cost  of  the  cheaper  vessel.  At  this  rate  we  could  build 
three  battleships  in  navy-yards  for  the  price  of  two  in  private  yards.  And 
yet  it  is  notorious  that  work  done  by  private  concerns,  with  the  spur  of 
§5lf-interest  constantly   applied   to  cut   down   the   cost,  can   be   done   more 


FUTURE    PROGRESS   WITHOUT    POVERTY      537 

salaried  superintendent,  and  to  devote  himself  more 
assiduously  to  barter,  or  to  raising  the  price  to  the  con- 
sumer.-^ This,  in  a  nut-shell,  is  the  basis  for  all  agitation 
in  favor  of  public  ownership :  that  private  profit-seeking 
gives  to  each  man  his  income  in  a  manner  which  constitutes 
it  the  greatest  possible  inducement  to  him  to  work,  against 
the  interests  of  the  consumer  and  the  least  to  work  for 
them.  All  successful  business  shows  the  result  of  this 
policy.  Not  only  it,  but  the  entire  superiority  of  American 
over  European  commercial  methods,  in  fact,  stands  as  evi- 
dence that  in  competitive  business  it  pays  to  neglect  almost 
altogether,  as  regards  the  time,  study  and  effort  of  the 
head  oflicials  themselves,  the  refinements  of  efficiency  in 

cheaply  than  like  work  under  the  direction  of  the  government.  Few  men 
are  so  keen  to  save  public  money  as  all  men  are  to  save  their  own.  This 
enormous  disparity  is  not  explained,  nor  has  any  effort  been  made  to 
explain  it.     .     .     ." 

The  importance  of  this  quotation  does  not  lie  in  the  item  of  news.  Any- 
one who  seeks  can  find  thousands  like  it.  It  lies  in  the  peculiar  persistency 
of  the  tradition,  in  the  minds  of  men  as  intelligent  as  these  editors,  that  it 
is  still  "  notorious  ''  that  public  work  costs  more.  But  the  degree  to  which 
private-corporation  work  costs  more  is  now  getting  to  be  something  more 
than  notorious;  it  is  infamous.  How  can  such  statements  as  the  above  be 
continued  in  by  men  of  public  responsibility  when  for  a  quarter-century 
the  various  socialistic  explanations  of  the  egregious  cost  of  work  done  for 
the  sake  of  gathering  the  dividend-and-profit  tax  connected  with  it  have 
been  rife  in  all  commercial  lands?  To  disagree  with  socialistic  explana- 
tions without  substituting  others  is  easy.  To  fear  their  logical  conclusions 
is  still  easier.  Both  attitudes  of  mind  are  common.  But  it  is  not  so  com- 
monly realized  that,  in  order  to  justify  their  prejudices,  their  fears  or  their 
simple  ignorance,  men  who  have  accepted  the  responsibility  of  public 
leadership  are  so  frequently  engaged  in  gulping  down  inconsistencies  as 
bald  as  the  one  just  mentioned. 

3  A  friend  of  mine,  an  official  of  a  manufacturing  corporation  of  mod- 
erate size,  was  once  party  to  a  conference  of  the  leading  manufacturers  in 
his  own  line,  met  in  New  York  for  the  purpose  of  an  "  understanding." 
In  the  course  of  the  discussion  he  spent  some  words  upon  the  reduction  of 
the  cost  of  production.  One  of  the  older  and  more  successful  members  of 
the  group  stopped  him  with :  "  Oh,  hang  all  that.  The  money  isn't  made 
in  the  factory.     It  is  made  right  here." 


538  THE    COST    OF    COMPETITION 

production,  In  order  to  control  more  effectively  higher 
prices  in  the  market.  If  barter  be  regarded  as  an  inevi- 
table accompaniment  of  exchange,  such  a  policy  is  undoubt- 
edly the  better  one.  If  it  is  not,  however,  the  fact  stands 
as  additional  evidence  of  how  the  barter-system  prevents 
the  consumer  from  getting  the  benefit  of  every  possible 
reduction  in  cost  of  production. 

(2)  Statistical  records  universally  uphold  the  correct- 
ness of  expecting  the  abolition  of  barter  to  reduce  costs. 
All  existing  progress  in  the  line  of  public  ownership  has 
justified  itself  by  cheapened  cost  or  better  service,  or  both. 
What  denials  of  this  statement  have  reached  our  eye  are 
uniformly  invalidated  by  their  arbitrarily  figuring  into  the 
book-keeping  the  very  items  of  profit,  interest,  etc.,  which 
public  ownership  is  expected  to  and  which  it  does  eliminate. 
But  as  this  volume  deals  only  illustratively  with  statistical 
support  the  reader  is  referred  elsewhere  for  these  data.^ 

Although  It  is  commonly  said  that  the  post-ofl5ce 
operates  at  a  deficit,  this  statement  is  not  true.  Even 
accepting  the  figures  as  they  appear  in  the  reports,  the 
average  net  result  of  surpluses  and  deficits,  taken  over  a 
number  of  years,  just  about  comes  to  zero.  But  this 
neglects  the  all-important  fact  that  the  heaviest  class  of 
mail-matter,  the  second,  is  handled  at  so  absurdly  low  a 
rate,  at  a  mere  fraction  of  the  cost  of  the  service,  that  its 
continuous  operation  constitutes  one  of  the  baldest  cases 
of  "  graft  "  upon  the  community  which  Is  now  going 
unprotested.  Moreover,  the  one  source  of  real  danger  of 
a  deficit,  these  second-class  rates,  exists  solely  because  pub- 
lic opinion  upholds  the  profit-making  plans  of  the  period- 
ical press  whose  influence  keeps  it  there. 

Again,  the  only  field  in  which  the  superiority  of  public, 

4  Bliss's  "  Encyclopedia  of  Social  Reform,"  Bemis's  "  The   City  for  the 
People,''  etc. 


FUTURE    PROGRESS   WITHOUT   POVERTY     539 

non-profit-seeking  organization  has  a  chance  to  evidence 
itself  in  the  post-office  is  in  the  mere  collecting,  sorting  and 
delivery  of  the  letters.  All  of  the  actual  transportation 
of  mail-matter,  by  land  or  water,  both  interurban  and 
between  post-office  and  railway-station,  is  done  on  the 
profit-seeking  plan,  by  private  enterprise.  Here  the  gov- 
ernment pays  not  only  the  full  cost  of  this  onerous  method 
of  operation,  but  it  pays  much  more.  The  average  price 
charged  by  the  railroads  for  carrying  mail-bags  is  several 
times  that  charged  the  express-companies  for  the  same 
service !  The  superficial  will  say,  "  See  the  weakness  of 
governmental  organization!  "  But  is  it  so?  In  the  first 
place,  are  the  rates  high  because  of  corruption  or  of  ineffi- 
ciency on  the  part  of  the  governmental  agents?  If  the 
first,  then  the  railroads  corrupted  them.  There  is  no 
reason  under  heaven  why  these  agents,  untempted,  should 
choose  to  elevate  the  rates.  There  is  no  reason  why  the 
railroad  people,  if  paid  in  salary  instead  of  in  profits, 
should  wish  them  elevated.  If  the  second,  the  railroads 
at  least  took  an  evil  advantage  of  this  inefficiency.  If  pub- 
lic opinion  and  corporate  conscience  should  both  insist  that 
there  is  a  natural  worth  to  the  service,  and  that  to  take 
more  than  the  publicly  declared  statement  of  that  worth 
were  robbery,  as  is  actually  the  case,  then  this  thing  could 
not  happen.  But  in  the  present  state  of  public  opinion, — 
upholding,  praising  and  richly  rewarding,  as  a  skillful  con- 
duct of  "  business,"  any  possible  elevation  of  prices  not 
accomplished  by  physical  violence, — this  result  is  the  only 
one  naturally  to  be  expected. 

As  to  the  government's  forcing  the  railroads  to  accept 
from  it  only  what  the  express-companies  get,  the  whole 
object  of  this  book  is  to  call  attention  to  the  fact  that  // 
would  cost  more  than  it  is  zvorth.  The  post-office  is  not 
equipped  for  successful  barter.     This  is  the  reason  why 


540  THE    COST    OF    COMPETITION 

its  service  is  the  best  and  the  cheapest  of  any  which  Vv'e 
have.  The  express-companies'  and  telegraph-companies' 
rates  are  higher  than  the  postal  rates  (in  the  fields  where 
the  two  are  equally  prepared  to  do  business)  chiefly 
because  these  corporations  are  commercially  formidable 
enough  to  extract  low  rates  from  the  railroads.  Warfare 
is  always  more  costly  than  peace.  The  proper  remedy  is 
not  to  inject  that  most  costly  virus  known  as  ability-to-con- 
trol-prices into  the  postal  system,  but  to  eliminate  that 
poison  from  the  railroads.  The  way  to  bring  down 
the  interurban  cost  of  mail-transmission  is  plainly  not  to 
equip  the  post-ofiice  department  for  comercial  barter, 
which  would  make  matters  only  worse  than  they  are  now, 
but  to  reorganize  the  railroads  as  public  carriers  in  the 
true  sense  of  the  term,  so  that  there  would  no  longer  be  the 
slightest  temptation  to  overcharge  anybody,  either  the 
post-office  or  the  people.^ 

The  same  remarks  apply  to  the  postal  frauds  just 
revealed:  they  have  not  occurred  in  the  form  of  profit- 
making  in  the  transmission  of  intelligence,  by  charging 
higher  rates  than  the  service  costs.  They  have  occurred 
where  the  Department  comes  into  contact  with  profit-mak- 
ing corporations  outside,  where  there  is  a  temptation  to 

"i  In  the  mailing  of  a  portion  of  this  manuscript  it  developed  that, 
owing  to  the  present  absurd  and  quite  unnecessary  system  of  postal 
charges,  it  was  going  to  cost  as  much  to  deliver  this  one  package  at  a 
single  address,  by  mail,  as  it  would  cost  to  have  over  fifty  lighter  pieces 
delivered  at  fifty  different  and  distant  addresses.  The  clerk  therefore 
advised  the  shipment  of  the  package  by  express. 

To  the  superficial  mind  here  is  a  fine  instance  of  the  superiority  of  the 
privately  operated  express-Companies  over  the  publicly  managed  post-office. 
But  is  it  so?  The  sole  reason  for  the  higher  charges  of  the  post-office  in 
this  class  of  work  is  that  it  persists  in  regarding  itself  as  a  carrier  of  let- 
ters only,  and  refuses  to  equip  itself  or  to  reform  its  schedule  of  prices  in  a 
way  fit  to  rival  the  express-companies  in  the  carrying  of  packages, — which 
defect  is  no  essential  part  of  its  public  system  of  operation.     On  the  other 


FUTURE    PROGRESS   WITHOUT    POVERTY     541 

share  in  those  profits.  They  have  consisted,  as  has  all 
governmental  corruption,  of  collusion  between  men  within 
the  non-profit-making  Department  with  the  profit-seekers 
outside.  The  men  within  are  expected  to  conserve  the 
people's  interests  and  to  remain  passive  in  the  face  of  the 
greatest  temptation;  and  in  the  great  majority  of  cases 
they  do  so.  The  men  outside  are  entirely  freed,  in  public 
opinion,  from  a  like  duty  of  conserving  the  people's 
interests.  They  may  not  only  abstract  the  community's 
money,  by  exalting  prices  to  the  consumer  to  the  utmost 
of  their  ability,  without  effective  rebuke,  but  they  may 
add  insult  to  injury  by  using  a  portion  of  the  tax  thus 
wrongfully  squeezed  from  us  to  the  corruption  of  our  pub- 
lic servants,  as  a  means  to  the  expansion  of  that  tax,  and  it 
is  all  "  good  business." 

In  making  these  comparative  investigations  of  cost,  too, 
the  advocates  of  barter-control  utterly  neglect  to  bring  out 
the  failures  upon  their  own  side.  The  enormous  percen- 
tage, in  the  neighborhood  of  ninety  out  of  each  hundred, 
of  failures  of  all  business-ventures  reported  by  Bradstreet 
they  do  not  so  vehemently  advertise.  Nor  does  Brad- 
street  reveal  the  true  measure  of  failure.  What  he  reports 
are  failures  to  make  a  profit  out  of  the  community.     It  is 

hand  stands  out  most  prominently,  as  an  indicator  of  the  true  state  of 
affairs,  the  fact  that  this  post-office  clerk,  because  his  service  was  organized 
for  the  saiie  of  its  task  and  not  for  profit,  guided  me  elseixihere  to  the  en- 
joyment of  a  rate  cheaper  than  he  could  offer! 

Where  else,  let  it  be  asked,  in  the  whole  realm  of  stores  and  offices 
frequented  by  the  consuming  public,  outside  of  the  libraries  and  custom- 
houses, could  any  attendant  guide  a  patron  elsewhere,  to  the  securing  of 
lower  price,  better  quality  or  greater  convenience  than  he  himself  had  to 
offer,  without  endangering  his  privilege  of  livelihood?  What  does  this 
indicate,  let  it  be  asked  and  pondered  most  seriously,  as  to  the  myriad  of 
opportunities  for  greater  value  or  convenience  at  a  lower  price  which  is 
daily  being  lost  to  the  millions  in  their  dealings  with  the  competitive 
system,  and  of  ivhich  they  are  never  directly  conscious? 


542  THE   COST   OF   COMPETITION 

the  gigantic  successes  at  making  a  profit  out  of  the  pubHc 
which  constitute  the  true  failures  at  wealth-production  for 
the  community.^     This  fact  they  are  most  careful  not  to 

6  While  it  is  impossible  to  present  more  than  a  suggestion  of  the  enor- 
mous mass  of  evidence  of  fact  which  is  constantly  arising  in  the  com- 
mercial news  of  the  day,  space  must  be  taken  for  occasional  examples. 
The  following  is  an  editorial  from  The  Outlook  for  November  14, 
1903: 

"  Were  it  not  too  serious  for  humorous  treatment,  the  testimony  which 
has  been  taken  before  the  courts  regarding  the  management  of  the  bank- 
rupt United  States  Shipbuilding  Company  would  furnish  a  fit  theme  for 
the  author  of  some  new  '  Mikado,'  who  wished  to  exhibit  topsy-turvydom 
in  a  realm  nearer  than  Japan.  We  have  refrained  from  commenting  upon 
this  testimony  until  the  whole  of  it  should  have  been  taken,  because  we 
do  not  wish  to  judge  of  any  man's  responsibility  for  the  deception  of 
inv^estors  until  he  himself  shall  have  been  heard.  Already,  however,  it 
has  been  made  clear  that  the  nominal  directors  of  this  great  combination 
were  for  a  time  at  least  mere  puppets  moved  by  the  hands  of  promoters. 
Some  of  the  directors  were  young  men  who  had  never  had  a  bank-account, 
and  who  had  only  a  doubtful  title  to  a  single  share  in  the  stock  of  the 
corporation  they  nominally  managed;  yet  these  young  men  reorganized  a 
company  with  nominally  forty-five  million  dollars,  and  issued  in  addition 
twenty-six  million  dollars  of  bonds  in  payment  for  properties  which  they 
purchased,  to  be  put  on  the  market  for  sale  to  trusting  investors.  The 
largest  of  these  purchases  was^  the  Bethlehem  Steel  Company,  for  which 
ten  million  dollars'  worth  of  bonds  and  twenty  million  dollars'  worth  of 
stock  were  given.  When  one  of  the  dummy  directors  was  asked  what  he 
knew  about  the  Bethlehem  Steel  Company,  for  which  he  had  voted  to  pay 
such  an  enormous  price,  he  replied  that  he  knew  practically  nothing, 
except  that  he  thought  that  it  was  located  at  Homestead.  When  asked 
by  the  lawyers  if  he  would  be  surprised  to  learn  that  it  was  located  at 
Bethlehem,  he  replied  that  he  would  not. 

"  Last  week,  before  the  completion  of  the  testimony  before  the  court, 
further  light  was  thrown  upon  the  management  of  this  great  concern  by 
an  authority  whose  evidence  must  be  accepted  as  judicial,  though  subse- 
quent testimony  from  Mr.  Schwab  may  possibly  explain  away  the  part  he 
now  seems  to  have  borne  in  the  transaction.  Ex-United  States  Senator 
James  Smith,  appointed  receiver  by  the  court,  has  reported  the  conditions 
which  he  has  found.  Summed  up  in  the  briefest  possible  way,  Mr.  Smith 
finds  that  the  nine  shipbuilding  and  steel  companies  consolidated  into  the 
trust  had  a  self-estimated  value  on  July  13  of  last  year  of  $15,400,000. 
The  price  paid  by  the  trust  for  these  properties  was  seventy-one  million 
dollars  in  bonds  and  stocks.  The  twenty-six  million  dollars  of  bonds  paid 
for    them    was    nearly    double    their    self-estimated    value.      The    forty-five 


FUTURE    PROGRESS    WITHOUT    POVERTY     543 

bring  out.  Both  what  they  say  and  what  they  omit  to  say 
stands  as  a  sign  of  their  hopeless  partiality,  of  the  heavy 
pecuniary  Interests  they  have  in  throwing  the  conclusions 

million  dollars  of  stock  represented  just  so  much  water — or  rather  air. 
The  prospectuses  issued  to  investors  figured  the  previous  profits  of  the 
merged  companies  unreasonably,  if  not  fraudulently.  At  some  points  it 
seemed  to  the  receiver  that  the  records  had  been  willfully  falsified.  Leaving 
out  the  Bethlehem  Steel  Works,  the  profits  of  the  individual  ship-yards' 
earnings  really  amounted  to  less  than  nine  hundred  thousand  dollars,  but 
were  represented  to  be  two  million  two  hundred  thousand  dollars.  Yet 
the  greatest  of  all  injuries  to  investors,  in  the  receiver's  opinion,  was  in 
the  transactions  relative  to  the  Bethlehem  Steel  Works.  Their  self-estimated 
value,  deducting  the  underlying  mortgages,  is  reported  to  have  been  little 
more  than  four  millions.  Yet  Mr.  Schwab  received  for  them  ten  millions 
of  bonds  and  twenty  millions  of  stock,  with  the  further  stipulation  that  the 
bonds  he  received  should  carry  with  them  voting  power,  so  that  he  was 
given  a  majority  control  of  the  entire  shipbuilding  combination.  He  was 
also  given  a  special  mortgage  upon  the  Bethlehem  works  to  secure  his 
bonds,  and  his  appointees  managed  the  works  so  as  to  increase  their  value 
at  the  expense  of  the  stockholders  of  the  trust.  During  the  time  the  Beth- 
lehem company  was  nominally  managed  by  the  trust,  it  earned  profits, 
according  to  Receiver  Smith,  approximating  two  million  dollars  a  year. 
None  of  this  sum  was  turned  over  to  the  United  States  Shipbuilding  Com- 
pany to  save  it  from  bankruptcy,  but  all  was  used  in  extending  and  improv- 
ing the  plant  at  Bethlehem,  so  that  if  the  trust  went  into  bankruptcy  the 
holder  of  the  mortgage  on  the  Bethlehem  works  would  get  them  back  worth 
much  more  than  when  he  sold  them.  In  the  receiver's  phrase,  the  manage- 
ment of  the  affairs  of  this  great  corporation  had  the  character  of  '  an 
artistic  swindle,'  and  he  declares  that  under  present  laws  all  those  who 
received  stock  as  a  bonus  upon  the  sale  of  their  plants  can  be  held  liable 
for  the  indebtedness  of  the  combination.  If  this  be  law  as  well  as  justice, 
the  creditors  of  the  combination  will  be  able  to  enforce  their  claims  against 
those  responsible  for  its  mismanagement.  The  creditors,  however,  are  not 
the  only  sufferers  from  bankruptcy  of  this  sort.  The  law  ought  to  pro- 
tect the  investors  who  put  their  money  into  the  stock.  Almost  the  first 
duty  of  the  law  is  to  protect  the  security  of  property;  in  countries  where 
property  is  insecure,  barbarism  is  supposed  to  prevail.  It  is  a  disgrace  to 
our  civilization  that  property  invested  in  industrial  corporations  should  be 
as  insecure  as  property  in  darkest  Africa." 

This  is  only  a  single  instance,  and  its  discussion  confines  itself  entirely 
to  the  wrongs  done  the  minority  stockholder.  But  how  about  the  much 
greater  wrongs  done  to  the  consumer?  The  swindle  revealed  by  Mr. 
Thomas  W.  Lawson  in  the  issue  of  Everybody's  Magazine  for  September, 
1904,  is  along  parallel  lines,  except  that  the  figures  are  greater.     But  all  of 


544  THE    COST    OF    COMPETITION 

in  one  direction  rather  than  the  other.  We  doubt  the 
value  of  public  ownership  and  operation  not  because  it 
has  failed  in  the  interests  of  the  public,  but  because  it  has 
failed  in  the  interests  of  the  barterers,  who  have  every 
inducement  to  blind  and  control  public  opinion  into  the 
belief  that  the  two  are  synonymous^ 

Any  reader  of  these  pages  can  find  in  his  weekly  review 
ample  current  evidence  of  all  this  sort  of  thing.  He  will 
find,  however,  no  record  of  publicly  owned  enterprises 
going  back  into  private  ownership  except  because  they 
have  proven  themselves  capable  of  earning  a  profit,  and 
then  against  the  will  of  the  consumers  and  at  the  behest  of 
the  political  machine:  an  organization  of  barterers  desirous 
of  enhancing  the  selling-price  from  its  natural  coincidence 


such  cases  taken  together  constitute  but  a  small  fraction  of  what  is  going 
on  all  the  time,  for  these  are  only  the  few  which  are  discovered;  the 
great  mass  of  them  are  too  skillfully  successful  to  be  caught.  Nor  are  they 
in  any  wise  to  be  seriously  treated  as  exceptions.  They  are  the  rule.  Nor 
are  they  at  all  abnormal.  They  are  the  legitimate  development  of  the 
simple  process  of  barter  instanced  as  between  fisherman  and  hunter.  Once 
admit  it  to  be  right  for  one  man  to  deceive  another  as  to  the  true  value  of 
an  article,  to  the  extent  of  one  penny  of  profit,  and  this  is  the  scale  of 
deception  and  of  profit  into  which  human  nature  will  inevitably  gravitate. 
'*'  The  steam-roads  frequently  reveal  the  same  thing:  the  unprofitable 
mismanagement  of  the  property  in  private  hands,  creditors  and  stock- 
holders losing  their  rightful  dues  in  the  face  of  high  prices  paid  by  the 
consumer,  until  failure  is  announced  and  the  wreck  is  passed  over  to  the 
receivers,  the  salaried  agents  of  the  community,  who  then  operate  it  in 
the  interests  of  the  community  until  it  is  again  solvent.  It  is  then  handed 
back  to  the  unpunished  dissipatprs  of  the  public  wealth  as  a  tool  for  the 
further  extraction  of  profit  from  the  public.  It  is  when  private  control 
has  proven  its  incapacity  that  public  management  is  universally  fallen 
back  upon,  to  succeed  by  its  superior  reliability,  efficiency  and  unity  with 
the  people  where  the  other  has  failed.  A  few  years  ago  it  was  reported 
that  over  forty  per  cent,  of  the  roads  west  of  the  Missouri  were  similarly 
in  the  hands  of  receivers.  Why  were  they  not  kept  there,  confiscated  by 
their  mismanagement  in  hands  seeking  only  the  exploitation  of  the  public, 
to  be  dedicated  forever  after  to  the  service  and  the  interests  of  the  public 
whose  power  and  efficiency  alone   made,   protected   and   saved   them? 


FUTURE    PROGRESS    WITHOUT    POVERTY     545 

with  cost  back  into  regions  where  a  profit  is  possible,  where 
there  is  a  margin  of  plunder  over  and  above  the  cost  of 
production  for  division  into  "  boodle  "  or  "  graft."  ^ 

(3)  It  has  already  been  established  that  the  average 
cost  of  competition  is  at  least  twice  that  of  production;  if 
in  some  services  it  is  less,  in  others  it  is  much  more.  It 
has  also  been  established  that,  given  external  conditions 
as  they  are  to-day,  this  proportion  cannot  be  diminished 
at  will;  it  is  fixed  by  forces  beyond  all  human  control  short 
of  the  unified  action  of  the  community  as  a  unit.  There- 
fore, barter  cannot  undertake  the  direction  of  production 
of  any  commodity  unless  there  is  reserved  to  it  a  margin 
over  the  cost  of  production,  in  order  to  cover  the  heavy 
barter-costs  now  prevalent  and  still  leave  a  net  profit  of 
something  like  two  hundred  per  cent.,  on  the  average 
(taking  in  all  the  exchanges  intervening  between  the  true 
raw  material  and  the  finished  product  in  the  hands  of  the 
consumer) .  Even  if  it  be  granted,  temporarily,  that  there 
is  something  in  this  argument,  that  perhaps  private  direc- 
tion could  reduce  the  cost  of  production  somewhat  below 
what  public  control  would  incur,  we  are  asked  to  believe 
that  this  difference  is  going  to  be  suflficient  to  cover  another 
item  twice  as  big  as  the  total  cost  of  production. 

For  it  must  be  remembered,  in  discussing  this  question, 
that  when  any  given  service  is  taken  over  from  private  to 
public  ownership,  a  comparison  of  the  prices  charged  does 
not  reveal  the  effect  of  the  removal  of  barter  from  all  of 
the  service  for  which  the  visible  price  is  paid.  Take,  for 
instance,  the  street-railways.  The  service  for  which  the 
public  pays  a  nickel  a  ride  is  not  merely  that  performed 
under  the  control  of  the  street-railway  company.  It  in- 
cludes an  interminable  array  of  accessory  services  scattered 
all  over  the  land:  the  mining  of  coal  and  the  manufacture 

8  The  best  instance  of  this  is  the  Philadelphia  gas-works. 


546  THE    COST    OF   COMPETITION 

of  mining-machinery;  the  transportation  of  coal;  the  design 
and  manufacture  of  power-house  apparatus  and  electrical 
machinery,  with  all  the  schools  contributive  thereto  and 
the  Patent  Office  back  of  that;  the  manufacture  of  lubri- 
cating-oil,  cars,  rails  and  transfer-checks:  all  of  these  are 
paid  for  by  the  passenger's  fare,  and  to  its  magnitude 
every  one  of  these  contributes  its  quota  of  cost  of  com- 
petition. The  service  from  which  barter  will  be  removed 
by  the  municipalization  of  the  road  is  merely  that  of 
motormen,  conductors,  etc.  The  sort  of  barter  removed 
will  be  merely  that  of  dividends  (upon  watered  stock), 
salaries  of  unnecessary  officials  and  a  variable  quantity  of 
legal  influence  against  the  people. 

All  of  these  services  not  locally  visible  may  be  lumped 
together  as  raw  m-aterial.  This  amounts,  roughly,  to  a 
third  of  the  entire  fare  charged.  We  may  assign  a  third 
each  to  local  labor  and  barter.  But  this  shows  the  cost  of 
competition  as  only  equal  to  that  of  production,  whereas 
twofold  was  just  mentioned  as  the  true  proportion.  The 
reply  is  that  in  street-railroading  the  cost  of  competition, 
here  vertical  only,  is  much  less  than  the  average  in  other 
services.  No  commercial  travelling,  no  commissions,  no 
advertising,  is  needed.  It  is  these  "  natural  monopolies,'' 
for  which  alone  the  public  is  now  beginning  to  demand 
public  ownership,  which  offer  the  least  argument  in  favor 
of  the  step. 

The  proposition  is  absurd  from  every  direction  in  which 
it  is  honestly  and  impartially  approached.  This  is  the 
saving  feature  of  the  situation.  Eventually  the  truth  will 
out.  In  order  that  community  ownership  and  operation 
should  supplant  private  methods  it  is  not  necessary  for  the 
few  existing  cases  of  the  former  to  demonstrate  a  striking 
superiority   over   their   profit-seeking   compeers.      It   does 


FUTURE    PROGRESS   WITHOUT    POVERTY      547 

not  seem  that  they  have  done  so  in  the  past.  While  the 
saving  and  the  success  have  been  always,  or  at  least 
usually,  there,  it  has  been,  in  one  sense,  moderate.  It 
has  already  been  explained  how  this  is  natural  and  in- 
evitable. But  this  fact  has  not  hindered  the  very  steady 
spread  of  public  demand  for  public  ownership.  Even  if 
this  moderate  success  had  been  moderate  failure  instead, 
it  would  not  have  hindered  this  spread.  No  statistical 
proof  of  moderate  failure  will  hinder  it.  So  far  as  one 
is  able  to  observe,  no  existing  public  plant  ever  derived  its 
actual  undertaking  from  the  economic  or  ethical  argu- 
ments in  favor  of  public  ownership.  In  nearly  every 
case  the  policy  was  adopted  by  its  community  because  all 
other  lines  of  effort  at  securing  good  service  at  moderate 
price,  coupled  with  freedom  of  its  government  from 
corporate  influence,  had  failed.  If  the  confused  propa- 
ganda of  the  socialists  and  the  demagogues,  against  which 
the  mouth-pieces  of  the  profit-seekers  direct  such  constant 
outcry  of  condemnation,  were  the  only  force  propelling 
us  toward  public  ownership  and  all  that  it  will  bring, 
there  would  be  little  danger  of  a  revolution.  Fortunately, 
we  have  something  much  more  powerful  to  rely  upon  as 
motive  power,  namely,  the  iniquities  of  the  profit-seekers 
themselves.  It  is  the  powerful  commercial  men  and  or- 
ganizations, hating  and  scorning  as  they  do  all  the 
theories  of  the  various  economic  apostles,  who  have 
wielded  the  forces  in  the  past  which  have  already  driven 
the  people,  maddened  by  the  growing  immoderation  of 
their  waste,  faithlessness  and  extortion,  to  turn  first  from 
orthodox  politics  to  mugwumpery,  then  from  free  trade 
or  tariff-reform  to  free-silver  populism,  and  now  from 
free  silver  to  the  open  advocacy  of  the  municipal  owner- 
ship of  public  monopolies  and  the  governmental  control 
of  the  rates  of  those  corporations  which  remain  private. 


548  THE    COST    OF    COMPETITION 

It  is  this  same  irresistible  commercial  power  of  the  day 
which,  having  been  given  here  in  America  more  rope 
than  elsewhere  in  modern  history,  is  now  about  to  com- 
pletely hang  itself,  by  forcing  the  public  into  an  un- 
answerable political  demand  for  complete  socialism.  It 
is  not  such  books  as  this  which  are  driving  us  on.  Nature's 
law  of  evolution  lays  the  guiding  rails;  we  sermonizers 
grease  the  curves  and  oil  the  bearings,  that  grinding 
friction  and  heat  of  impact  may  be  lessened  as  we  go; 
but  the  power  that  is  driving  us  along  this  road  is  that 
very  insatiate  greed  of  the  competitive  system  which  we 
here  decry — heeding  naught  but  itself  and  its  desires, 
scorning  all  danger  of  effective  arrest,  reckless  of  the  anger 
and  power  of  a  patient  public.  Into  the  furnace  of  this 
locomotive  engine  the  fuel  is  being  shoveled  fast.  Each 
new  case  of  private  graft,  every  new  sign  of  instability 
of  prices,  each  fresh  investigation  of  corporate  crooked- 
ness, from  the  Standard  Oil  of  thirty  years  ago  to  the 
Mutual  Insurance  rottenness  that  is  now  oozing  into 
light  of  day  as  these  words  are  written — all  serve  as  oil 
and  fat-wood  to  feed  the  fire  of  public  indignation. 
There  is  little  need  for  public  ownership  to  prove  that  it 
is  better.  The  alternative  which  we  now  enjoy  is  not 
only  so  infinitely  worse;  it  is  fast  growing  absolutely 
intolerable. 

Finally,  if  there  were  anything  at  all  seriously  back  of 
the  arguments  against  public  control,  all  that  is  needed  to 
establish  the  fact  is  a  fair  trial  between  the  two  plans. 
Most  of  the  gentlemen  controlling  the  services  imme- 
diately threatened  with  the  proposed  change  are  men  of 
sense;  they  could  not  be  expected  to  object  to  this  fair 
trial  by  jury.  Yet  they  do  so  object,  most  strenuously,  to 
the  extent  of  incurring  heavy  expenses  for  lobby  and  for 
legal  counsel,   for  influencing  the  press,   etc.     The  only 


FUTURE    PROGRESS   WITHOUT    POVERTY     549 

result  attained  thereby  is  the  addition  to  the  evidence 
already  in  the  public  mind  of  the  conviction  that  they 
must  be  now  drawing  big  profits  from  the  business  or  they 
would  find  neither  impulse  nor  resource  for  so  expensively 
obstructing  an  experiment  which  could  not,  in  the  nature 
of  affairs,  do  aught  but  bring  out  the  truth  as  cheaply  as 
truth  is  ever  obtained.  Let  those  who  are  so  fearfully 
considerate  of  the  tax-payer's  interests  exhibit  some  like 
concern  for  the  Interests  of  the  profit-dividend-and- 
interest-payer ! 

The  Economic  Gain  of  Cooperation  to  the  Com- 
munity. The  first  consequence  of  the  adoption  of  any 
such  a  public  policy  as  that  outlined  above  would  be  the 
gradual  retirement  of  all  capitalism,  by  the  gradual  trans- 
fer of  all  ownership  of  capital  to  the  community  and  the 
cancellation  of  its  valuation,  or  capitalization,  by  means 
of  a  sinking-fund.  This  process  has  already  been  carried 
out  completely  in  a  few  instances,  and  is  already  stably 
under  way,  with  the  funds  accruing  from  prices  lower  than 
those  prevailing  under  private  operation.  In  many  other 
cases.  The  process  is  a  simple  one.  There  has  never 
appeared  to  be  any  difficulty  in  hiring  a  superintendent 
who,  when  told  that  his  duties  were  first  toward  the  public 
rather  than  toward  the  Interests  of  a  private  board  of 
directors,  could  not  or  would  not  do  this  thing  conscien- 
tiously and  well.  In  the  few  Instances  of  comparative 
failure  the  hand  of  some  private  corporation  having  a 
pecuniary  interest  in  the  failure  of  the  public  enterprise 
was  plainly  manifest. 

It  has  been  pointed  out  that  the  spirit  of  emulation  has 
free  play  only  in  the  ranks  of  the  producers,  and  there  only 
under  repression  by  the  presence  of  barter  outside.  That 
Is,  emulation  in  production  is  constantly  aiming  to  produce 


550  THE    COST    OF   COMPETITION 

ever  at  great  and  greater  efficiency,  and  hence  at  steadily 
lessened  cost.  If  this  decrease  in  cost  did  but  reach  the 
consumer,  the  producer  would  receive  the  natural  reward 
of  his  diligence  in  multiplied  consumption  of  his  goods; 
he  would  be  encouraged  and  sustained  thereby  to  further 
diligence.  But  at  present  it  does  not.  In  between  stands 
barter,  seeking  not  to  lower  prices  to  the  consumer,  but 
to  exalt  them  (or  when  so  seeking,  doing  so  by  methods 
which  entail  the  exactly  opposite  result),  seeking  not  to 
extend  the  volume  of  production  and  exchange,  but  the 
volume  of  profits,  which  reach  a  maximum  only  when  the 
volume  of  exchange  is  far  below  its  possible  maximum. 
Thereby  the  emulative  spirit  of  the  producers  is  stifled  into 
a  minimum  of  activity. 

But  with  the  legal  fixation  of  all  prices,  by  public  foun- 
dation upon  the  cost  of  production,  this  emulation  will 
find  full  sway.  Between  rival  factories,  localities,  super- 
intendents and  operatives  the  race  to  report  the  lowest 
cost  of  production  will  be  keen.  It  will  be  much  more 
so  than  at  present  for  the  following  reasons : 

( 1 )  The  results  of  the  rivalry  will  be  made  public, 
and  both  the  material  income  and  the  fame  and  honor 
reaching  a  man  will  be  dependent  thereon.  The  superin- 
tendents and  directors  of  production  will  then  be  as  prom- 
inently before  the  public  as  are  now  the  directors  of  our 
vast  profit-seeking  organizations. 

(2)  The  pecuniary  reward  for  increased  efficiency  of 
production  will  be  much  greater.  Now,  with  the  bar- 
terers  in  control  of  all  productive  effort,  the  bulk  of  the 
natural  reward  for  any  decrease  in  cost  of  production  J 
either  goes  to  them  or  is  lost  to  everyone  in  increased  1 
barter-cost;  in  either  case  it  never  reaches  those  who 
earned  it. 

In  any  such  situation   as  that  proposed,   it  will  soon 


FUTURE    PROGRESS   WITHOUT    POVERTY     551 

become  apparent  to  the  superintendents  of  production, 
striving  for  this  reduction  of  cost,  that  one  of  the  heaviest 
items  upon  their  cost-sheet  is  the  interest  paid  upon  land, 
buildings  and  tools  utiHzed.  To  cover  the  depreciation 
of  the  latter  two  there  must  already  be  in  operation  some 
form  of  sinking-fund,  the  current  payments  to  which  are 
made  by  the  producers.  No  matter  what  the  form  of 
organization  or  what  the  methods  of  book-keeping,  this 
is  now  being  done  in  every  productive  establishment;  if 
not  attended  to  consciously,  methodically  and  wisely  it 
will  maintain  itself  automatically,  if  clumsily.  Therefore 
would  the  idea  be  inevitable  of  somewhat  increasing  this 
sinking-fund  (or  of  starting  a  duplicate)  with  the  object 
of  gradually  canceling  the  capitalization  of  the  capital 
in  use,  leaving  the  latter  for  use  free  of  all  indebtedness. 
This  is  at  present  a  standard  policy  in  the  minority  of 
industries  not  operated  for  the  purpose  of  profit-making, 
and  is  always  successful  and  profitable.  These  services 
are  ultimately  conducted  by  the  producers  without  the 
payment  of  a  cent  of  interest  upon  capital  utilized,  the 
entire  capitalization  having  been  canceled  and  eliminated 
by  the  gradual  operation  of  a  modest  sinking-fund.  But 
in  any  productive  service  operated  for  "  business  "  instead 
of  for  the  service,  it  Is  to  be  remembered,  such  a  policy 
is  the  last  one  desired.  The  prime  object  of  the  barterers, 
who  are  then  in  control,  is  to  increase  the  capitalization, 
not  to  decrease  it.  When  other  methods  fail,  or  even 
before  they  do,  the  stock  is  watered  in  order  to  increase 
the  capitalization  of  the  capital  In  use,  to  thus  deliber- 
ately Increase  the  Interest-payments  charged  up  In  the 
price  to  the  consumer,  as  one  of  the  costs  of  doing  bus- 
iness. This  is  one  of  the  many  ways  In  which  barter  is 
continually  seeking  to  exalt  the  selling-price  to  the  con- 
sumer,  although   ever  pretending  that   Its  sole   ambition 


552  THE    COST    OF   COMPETITION 

is  to  reduce  the  selling-price, — whereby  it  forswears  its 
own  honor  and  self-respect  and  the  trust  of  the  com- 
munity at  one  and  the  same  time.^ 

The  result  of  such  a  natural  policy,  therefore,  would  be 
the  completion  of  the  list  of  specified  plans  (page  531) 
by  the  addition  of  the  following  plank,  viz. : 

(3)  The  ultimate  ownership  of  all  the  capital  of  the 
country  by  the  community. 

This  plank  Is  one  already  widely  advocated  throughout 
the  land.  It  was  not  included  in  the  original  premises  of 
this  synthesis  for  this  reason,  the  weight  of  which  should 
be  clear  from  the  general  analysis  now  complete: 

The  ownership  by  the  community  of  the  capital  utilized 
in  the  nation's  productive  enterprises  docs  not  necessarily 
protect  the  consumer  from  extortion,  and  the  community 
from  the  misery  and  disgrace  of  slums  and  Submerged 
Tenths,  if  unaccompanied  by  the  public  condemnation  of 
all  profit-seeking  and  all  variability  of  prices  and  wages. 
Witness,  for  example,  the  public  ownership  of  street- 
railways  which  are  operated  by  private  companies, 
Chicago's  river-tunnels.  New  York's  docks,  etc.  Upon 
the  other  hand,  the  public  condemnation  of  all  variation 
of  prices  must  necessarily  entail,  ultimately,  the  public 
ownership  of  the  capital  utilized  and  the  complete  removal 
of  the  service  from  all  influence  by  the  barterers.  There- 
fore the  latter  is  stated  first,  as  a  cause;  the  former  last, 
as  an  incidental  result. ^^ 

9  To  prove  that  the  sinking-fund  payments  needed  to  cancel  all  such 
capitalization,  even  including  the  artificial  inflation,  in  twenty  years,  say, 
are  far  below  the  interest,  dividends,  net  profit  and  barter-cost  now  charged 
up  to  the  consumer  instead,  is  a  simple  problem  in  bookkeeping  which  any 
business-man  may  solve  for  himself  as  applied  to  any  service  for  which  he 
happens  to  possess  the  necessary  data. 

^•^  As  a  matter  of  programme  of  procedure,  the  writer  takes  no  dogmatic 
stand  upon  this  point.  He  welcomes  all  recommendations  looking  toward 
public  ownership   as  incidental  aids.    But  a  scientific  statement  of  the  argu- 


FUTURE    PROGRESS   WITHOUT   POVERTY     553 

As  the  progress  of  such  a  policy  gradually  absorbed 
the  capital  of  the  country  out  of  and  away  from  capitaliza- 
tion, the  latter  would  accumulate  upon  the  capitalists' 
hands;  not  so  rapidly  as  now,  because  their  income  would 
be  gradually  shut  off  at  the  same  time.  This  accumula- 
tion of  exiled  capitalization  will  at  first  seek  outlet  in  the 
direction  of  the  control  of  new  inventions,  the  staple 
commodities  being  naturally  the  first  to  leave  the  profit- 
seeking  field.  This  will  give  renewed  zest  to  inventive 
ability.  But  if  the  policy  of  public  absorption  of  private 
enterprise  be  properly  forwarded  it  will  gradually  catch 
up  with  the  creation  of  new  enterprises  and  the  capitalist 
will  see  his  field  for  exploitation  gradually  narrowing. 
In  consequence,  interest-rates  must  steadily  fall;  until,  in 
the  end,  all  possibility  of  further  capitalization  being 
gone,  by  the  new  policy's  having  caught  up  with  the  pro- 
gress of  the  times,  the  standard  rate  of  interest  will  be 
zero. 

Assuming  that  the  people  had  not  first  been  driven,  by 
the  extortions  of  the  barterers,  into  the  desperation  which 
leads  to  confiscation,  as  was  the  case  with  slavery,  the 
capitalist  would  still  possess  the  full  amount  of  his  original 

ment  cannot  be  correct  unless  it  places  the  condemnation  of  profit-seeking 
in  the  place  of  first  importance  and  the  advocacy  of  public  ownership  in 
the  second.  The  outcome  in  practical  politics  will  uphold  this  positlo;). 
Public  ownership  adopted  merely  as  a  business  measure,  to  procure  lower 
prices,  or  because  private  control  of  the  service  has  become  intolerable, 
will  succeed  in  what  it  aims  at.  It  has  uniformly  done  so.  But  it  will 
utterly  fail  of  accomplishing  what  it  legitimately  may  when  incorporated 
as  a  national  policy,  the  alleviation  of  all  community-misery,  unless  it  is 
consciously  and  deliberately  aimed  at  the  elimination  from  the  body-politic 
of  all  barter  and  the  identification  of  cost  and  selling-price.  Many  citizens 
who  occasionally  uphold  the  public  ownership  of  the  lighting  or  street- 
railway  services  spend  the  bulk  of  their  time  and  strength  in  that  profit- 
seeking  over  the  supply  of  coal,  paving-stones,  telephone  or  banking 
facilities,  etc.,  which  corrupts  our  government  and  reduces  the  gains  due 
to  accomplished  public  ownership  to  a  minimum, — a  pitiful  one  step  for- 
wards and  three  backwards  in  the  interests  of  the  community. 


554  THE    COST    OF   COMPETITION 

capitalization.  He  could  keep  it  or  he  could  spend  it, 
as  he  chose;  but  he  could  spend  it  only  once;  he  could 
draw  no  interest  upon  it  so  as  to  be  able  to  re-spend  it 
over  and  over  again  indefinitely. 

As  to  the  elimination  from  the  selling-price  of  the 
items  of  Division  II,  other  than  interest  and  rent,  by  the 
public  fixation  of  all  prices,  that  is  practically  automatic. 
It  has  been  constantly  shown  how  the  entire  aim  and  occu- 
pation of  the  barterers,  who  alone  inhabit  what  is  known 
as  the  commercial  world,  is  the  control  of  valuations:  to 
the  end  that  they  may  be  exalted  to  the  maximum.  For 
to  the  barterers  the  era  of  prosperity  is  the  period  of  high 
prices.  Therefore,  if  the  community  once  sets  out  to 
enforce  the  fixity  of  all  prices  it  removes  the  barterer's 
entire  occupation.  It  amounts  to  a  cancellation,  although 
not  necessarily  a  confiscation,  of  all  purely  commercial 
vested  interests. ^^ 

The  "  legal  control  "  of  prices,  as  at  present  frequently 
advocated  for  a  few  industries,  is  not  this  same  proposi- 
tion at  all.  For  it  still  contemplates  the  sale  of  the  com- 
modity at  a  margin  above  cost,  at  a  net  profit,  which  shall 
constitute  the  income  of  him  who  handles  it;  and  this  is 
plainly  no  true  control  at  all.  For  it  merely  transfers 
the  task  of  the  control  of  the  price,  of  the  deception  as 
to  the  true  value  of  the  commodity,  as  to  the  real  cost 
of  production  and  as  to  the  actual  margin  of  profit  exist- 
ing thereover,  from  an  appeal  to  a  million  of  consumers 

11  As  to  this  virtual  cancellation  of  vested  interests,  in  so  far  as  they 
are  devoted  to  barter,  not  production,  herein  will  be  found  no  faint  pre- 
tense of  advocating  anything  to  the  contrary,  as  appears  so  frequently  in 
the  politic  propaganda  of  the  single-tax  school  of  social  reform.  As  a 
matter  of  fact,  the  single-tax  proposition  virtually  amounts  to  not  only 
the  cancellation,  but  the  confiscation  of  all  private  land-valuation,  to  the 
abolition  of  all  landlordism,  just  as  this  plan  for  fixity  of  prices  does  away 
with  all  capitalism  and  all  barter.  Indeed,  either  plan  is  ivorthless  except 
in  so  far  as  it  accompUslies  just  tliis  result. 


FUTURE    PROGRESS    WITHOUT    POVERTY     555 

to  an  address  to  a  half-dozen  public  commissioners, — a 
very  great  gain  in  concentration  of  effort  for  the  bar- 
gainers. It  is  true  that  the  commissioners  are  supposed 
to  be  honest  men,  not  open  to  corrupting  influence;  and 
here  is  not  the  least  disposition  to  question  their  natural 
tendency  to  be  so.  But  they  are  not  supposed  to  be  omnis- 
cient. No  one  can  possibly  know  what  is  the  real  cost  of 
production  of  an  article  except  him  who  produces  it — and 
those  who  appear  before  our  public  commissioners  as  repre- 
senting certain  industries  are  not  the  true  producers  in 
that  industry,  nor  their  representatives;  they  are  the  bar- 
terers,  or  their  representatives,  and  the  prime  weapon  of 
barter  is  the  concealment  of  the  truth.  Therefore,  no 
public  commissioners,  however  honest,  can  ever  hope  to 
truly  protect  the  people  from  the  making  of  profit  out  of 
them.  Indeed,  no  public  commissioners  attempt  it,  or 
are  expected  to  do  so;  for  the  making  of  a  profit  is  not 
now  regarded  as  a  felony,  as  it  should  be.  But  no  public 
commissioner  may  be  expected  to  successfully  protect 
the  interests  of  his  clients  until  he  adopts  that 
policy. 

Moreover,  to  admit  in  principle  that  every  man  is 
tempted  to  swell  his  income  in  every  way  possible;  to 
assert  that  the  value  of  a  certain  service  to  the  community 
is  limited  and  that  it  is  the  duty  of  the  law  to  see  that 
this  limit  is  not  exceeded;  to  then  adopt  the  practice  of 
permitting  the  director  of  a  service  to  secure  his  income 
by  forcing  the  selling-price  as  far  as  he  can  above  the  true 
value;  to  specify  a  legal  limit  thereto  and  to  then  hire  a 
second  official  to  see  that  the  first  exceeds  it  neither  by 
force  nor  deception:  all  this  is  fearfully  cumbrous  and 
inefl'icient.  The  plain  way  to  accomplish  what  is  desired 
is  to  publicly  condemn  all  effort  at  making  any  profit  what- 
ever; in  the  first  place,  by  adopting  the  following  fun- 


556  THE    COST    OF    COMPETITION 

damental    rules    for    guidance    in    the    abolition    of    dis- 
sipation: 

( 1 )  The  salaried  superintendent  of  production  must 
be  the  public  commissioner  for  all  decisions  as  to  prices 
concerning  the  commodity  he  produces; 

(2)  He  must  be  the  last  one  to  handle  any  funds  con- 
cerned in  that  production. 

(3)  His  own  income  must  be  in  the  form  of  a  salary, 
publicly  declared  and  invariable,  except  by  public  processes, 
having  no  direct  dependence  upon  the  momentary  quantity 
of  goods  handled. 

The  first  two  of  these  methods  constitute  exactly  the 
present  accepted  policy  in  all  eflicient  factory-organiza- 
tion of  any  size.  The  third  is  the  present  accepted 
policy  in  dealing  with  all  public  men,  and  works  effi- 
ciently. 

(i)  The  superintendent  is  paid  a  salary;  no  profit- 
seeking  on  his  part  would  be  tolerated  for  an  instant,  i 
He  reports,  from  his  foreman  and  to  the  Central  Office,  all  " 
cost-accounts,  viz.,  the  wages  of  each  man,  based  upon 
(although  not  equal  to)  his  actual  productivity,  as 
observed  by  his  foreman;  the  cost  of  raw  material;  the 
cost  of  all  incidentals,  such  as  light,  heat,  power,  etc.  ^^ 

(2)  The  treasurer  and  the  cashier's  organization  (all  | 
salaried),  acting  upon  the  data  of  this  report,  carry  out 
the  distribution  of  income,  from  the  largest  salary  to 
the  lowest  wages.  If  the  few  higher  officials  who  own 
stock  and  draw  dividends  be  excepted,  these  incomes  are 
all  predetermined  according  to  productivity  and  are 
rigidly   fixed,    in   comparison   with   the   present   frequent 

12  It  is  merely  incidental  that  another  official,  salaried  and  having  no 
interest  in  the  net  profits,  and  in  that  sense  a  duplicate  of  the  superintend- 
ent, adds  to  this  list  the  items  of  rent,  interest,  advertising,  etc.,  so  as  to 
place  in  the  hands  of  the  Central  Office  a  complete  report  of  the  commer- 
cial cost  of  operation. 


FUIURE    PROGRESS    WITHOUT    POVERTY      557 

fluctuations  of  the  incomes  drawn  by  the  barterers  and  of 
the  prices  upon  which  they  depend.  The  recipient  may 
increase  them,  but  only  by  currently  producing  to  the 
organization  an  equal  or  a  greater  increment  of  value 
than  his  increment  of  income. 

Therefore,  this  plan  which  is  advocated  for  systematic 
ajid  legal  adoption  by  the  nation  as  a  unit  is  exactly  the 
one,  including  all  considerations  of  individual  psychology, 
which  is  now  supremely  operative  over  some  eighty-six 
per  cent,  of  the  industrial  population,  all  of  those  included 
under  Division  I.  The  sole  fault  in  the  results  worked 
out  by  the  system  is  that  it  is  not  carried  far  enough 
nor  freely  enough.  The  presence  of  barter  restricts  the 
activity  of  this  eighty-six  per  cent,  to  some  thirty  per 
cent,  of  the  nation's  total  industrial  activity;  the  benefi- 
cent results  of  this  fractional  application  of  the  policy 
cannot  leak  through  the  fourteen-per-cent.  incrustation 
of  barterers,  to  sustain  society  as  a  whole. 

It  must  also  ever  be  remembered  that  for  this  eighty- 
six  per  cent,  of  the  population  this  great  change  in  our 
economic  system  will  mean  nothing  at  all  except  an 
increase  in  their  purchasing-power  and  their  choice  of 
work,  an  opening  up  of  life's  general  opportunities  before 
them.  They,  the  producers,  now  live  and  work  under 
exactly  the  conditions  prescribed  in  our  remedy,  except 
as  to  the  volume  and  intensity  of  demand  for  labor. 
They  now  work  upon  raw  material  which  is  not  theirs, 
with  tools  which  are  not  theirs,  to  the  production  of  a 
marketable  result  which  is  not  theirs,  for  a  rate  of  pay 
in  the  determination  of  which,  or  of  its  purchasing-power, 
they  have  practically  no  voice.  Throughout  the  long 
hours  of  each  week  they  have  little  sense  of  "  mine  "  ; 
the  preliminary  programme  and  the  final  result  are  pre- 
scribed, merely  a  minor  degree  of  method  being  theirs 


558  THE    COST    OF    COMPETITION 

to  choose  and  love;  it  Is  only  on  Saturday  night  that  a 
yellow  envelope  is  "  theirs,"  delivered  with  the  word  that 
it  is  presented  to  them  by  the  capitalist  and  that  they 
ought  to  be  thankful  that  it  is  no  less ! 

Remember,  too,  that  these  are  the  producers!  These 
are  they  who  make  everything  which  we  prize.  These 
include  the  organizers  of  work,  the  designers,  the  inven- 
tors, the  artists,  the  writers,  the  teachers  and  the 
preachers,  as  well  as  the  mere  artisans.  Even  if,  in  some 
of  these  cases,  the  yellow  pay-envelope  becomes  a  bit 
figurative,  yet  the  life-aspect  of  the  situation  is  not  one 
whit  different. 

Remember,  further,  that  this  proposed  plan  for  the 
rational  distribution  of  wealth  constitutes,  for  the  con- 
sumers, just  such  a  Central  Office  as  is  relied  upon  in 
every  factory  for  the  exchange  of  intelligence  between 
the  diverse  trades.  In  the  factory  the  central  office  not 
only  determines  the  rate  and  distributes  the  pay  of  each 
workman,  but  it  decides,  according  to  a  simple  balance 
of  Supply  and  Demand,  at  what  rate  his  raw  material 
and  his  supplies  must  be  charged  against  him.  It  deter- 
mines the  number  of  hours  which  each  department  must 
operate,  in  order  that  the  equilibrium  of  the  entire  estab- 
lishment may  be  maintained,  and  thus  transmits  to  each 
workman  a  ready  signal  as  to  the  world's  demand  for  his 
particular  sort  of  labor.  It  is  this  Central  Office  idea 
which  we  wish  adopted  upon  a  national  scale  of  scope  and 
authority,  that  in  its  dealings  with  each  citizen  it  shall 
be  responsible  to  the  entire  body  of  citizens,  instead  of, 
as  now,  merely  to  its  several  selfish  selves. 

Indeed,  it  is  only  to  the  fourteen  per  cent,  of  barterers 
that  we  ask  to  have  the  aspect  of  life  materially  altered 
in  kind,  rather  than  in  degree.  That  the  change,  dictated 
solely  in  economic  terms,  will  be  one  calculated  to  much 


FUTURE    PROGRESS    WITHOUT    POVERTY      559 

improve  their  mental  attitude  toward  life,  as  well  as  to 
increases  their  productivity  and  their  material  enjoyment, 
it  is  sincerely  believed.  Yet  the  remedy  will  be  of  a  sur- 
gical nature,  demanding  of  them  a  renunciation  of  that 
which  now  is  dearest  to  their  hearts:  barter.  But  our 
main  argument,  at  present.  Is  that  the  barterers  are  so 
much  in  the  minority  that  their  interests  and  their  pref- 
erences cannot  control,  either  to  elevation  or  destruction, 
the  destiny  of  the  land.  It  is  the  prosperity  of  the 
greatest  number  which  is  our  main  concern.  If  we 
demand,  to  that  end,  a  change  which  consists,  essentially, 
of  a  mere  removal  of  the  brakes, — calling  for  no  more 
motive  power,  as  is  now  so  continually  being  done  by  the 
discontented  employers  of  the  land,  without  specification 
of  from  what  natural  source  it  is  to  be  expected, — but 
merely  for  a  better  chance  for  the  action  of  what  power 
we  now  have,  certainly  there  ought  to  be  little  question  as 
to  the  success  of  the  plan. 

In  short,  it  is  proposed  to  take  the  factory-owner  at 
his  word  and  to  follow  his  own  example.  We  propose 
to  organize  all  workers,  over  and  under  both,  as  the 
employees  of  the  community,  in  the  same  manner  as  he 
now  organizes  "  his  "  employees.  For  it  must  ever  be 
remembered  that,  if  the  policy  so  frequently  urged  by 
commercial  men  in  speaking  of  public  affairs,  viz.:  that 
the  people's  government  ought  to  follow  the  shining 
example  of  the  business-world,  ought  to  carry  on  its 
administration  in  a  business-like  way, — if  this  policy 
were  once  seriously  adopted  by  the  people,  the  immediate 
result  would  be  that  every  barterer,  every  purely  commer- 
cial man  in  the  country,  zvould  find  himself  out  of  a  job 
and  iiithout  an  income;  for  the  entire  country  would  then 
be  organized  upon  the  plan  upon  which  he  now  runs  the 
factory-production  in  which  he  takes  no  part,  in  which  he 


56o  THE    COST    OF    COMPETITION 

permits  not  one  iota  of  individual  profit-making,  nor  even 
of  profit-seeking. 

The  Growth  to  Be  Released  by  the  Abolition  of 
Economic  Dissipation.  The  result  of  adopting 
such  a  public  policy  is  shown  geometrically  in  Fig, 
25.  Therein  DD  is  the  curve  of  aggregate  demand  of 
the  community,  covering  all  commodities.  The  AS-lines 
constitute  a  series  of  supply-curves,  of  which  the  upper- 
most one  represents  the  state  of  supply  at  the  time 
the  new  policy  is  first  put  into  operation.  Since  this 
reformation  amounts  to  the  elimination  of  all  the  items 
entering  into  the  market-price  from  Division  II,  for 
all  commodities,  as  the  supply  of  each  in  turn  becomes 
reorganized  upon  the  new  plan  the  curve  of  aggre- 
gate supply  drops  one  notch  downwards.  When  all 
commodities  have  been  so  treated  the  supply-curve,  accord- 
ing to  the  data  shown  in  Fig.  1 1,  finds  itself  in  the  lowest 
position  illustrated,  at  a  height  above  OE  of  thirty-four 
per  cent,  of  its  original  elevation  (assuming  that  all  other 
conditions  remain  unchanged  in  the  meanwhile).  The 
effect  of  these  successive  drops  in  mean  price  is  immedi- 
ately visible  in  the  increased  extent  of  trading  in  the  mar- 
ket, which  moves  out  from  e^m^  to  ^oWo,  and  thus  on  to 
e^m^,  in  consequence.  It  is  to  be  noted  how  each  succes- 
sive equal  drop  in  the  scale  of  prices  results  in  a  rapidly 
increasing  jump  in  volume  of  exchange.  But  it  is  quite 
impossible  to  convey  graphically  the  true  expansion  of 
trade  to  be  expected  from  the  drop  in  prices  which  would 
result  from  the  abolition  of  competition,  because  the 
market  is  at  present  in  a  lower,  more  stable  position  than 
ifij ;  to  portray  it  in  its  true  position  and  then  show  a  drop 
of  prices  to  one-third  of  the  present  standards  would  result 
in  a  movement  of  the  em  lines  so  far  to  the  right  as  to  defy 
good  portraiture.     Either  an  enormous  diagram  must  be 


FUTURE    PROGRESS    WITHOUT    POVERTY      561 

O       >  ^ 


562  THE    COST    OF    COMPETITION 

used  or  else  a  scale  so  small  as  to  cramp  matters  into 
invisibility. 

The  result  of  such  a  reorganization  upon  the  country's 
volume  of  production,  exchange  and  consumption,  there- 
fore, cannot  be  immediately  expressed  or  comprehended 
in  ordinary  language.  Just  what  increase  in  extent  of  pro- 
duction and  exchange  corresponds  to  a  reduction  of 
seventy  per  cent,  (or  more,  if  the  step  be  taken  not  imme- 
diately) in  average  prices  to  the  consumer,  is  not  now 
known.  The  only  thing  certain  is  that  it  would  be  enor- 
mous. It  would  be  very  much  more  than  unity  divided 
by  0.30,  or  over  two  hundred  per  cent.  It  must  be  several 
times  that,  probably  to  seven  to  ten  times  as  great  as  now. 
Nor  is  this  tremendous  prediction  based  at  all  upon  the 
now  supposititious  but  then  inevitable  increase  in  efficiency 
of  the  individual  workman,  based  upon  better  demand 
for  labor,  better  wages  and  higher  standards  of  living; 
nor  upon  that  of  the  productive  establishments,  based 
upon  true  consolidation,  unification  and  a  larger  scale  of 
production.  Each  of  these,  as  Mr.  Kipling  would  say, 
is  another  story.  It  is  based  solely  upon  the  supposition 
that  the  energy  and  talent,  the  best  of  the  country,  which 
is  now  devoted  to  the  dissipation  of  wealth,  be  diverted 
therefrom  into  productiv^e  channels. 

It  is  entirely  impossible  either  to  imagine  or  to  convey 
any  adequate  comprehension  of  what  this  means.  Per- 
haps, by  looking  back  to  the  time  when  the  total  volume 
of  goods  produced  was  only  from  one-seventh  to  one- 
tenth  of  what  it  is  now,  which  is  not  so  very  long  ago 
(about  1850),  and  contrasting  with  present  standards 
the  social  and  industrial  conditions  and  conceptions  then 
rife,  some  idea  of  the  tremendous  changes  in  our  national 
life  now  imminent  may  be  obtained;  but  only  a  very  vague 
an  '^unsatisfactory  one.     For  whereas  the  last  fifty  years 


FUTURE    PROGRESS    WITHOUT    POVERTY      563 

have  witnessed,  incidentally  to  the  expansion  in  produc- 
tion of  wealth,  a  concrete  change  in  social  ethics  only  in 
the  abolition  of  slavery,  affecting  chiefly  a  minor  race,  the 
next  half-century  is  to  witness  a  complete  revolution  in  all 
civic  science  and  ethical  formulas,  vitally  affecting  the  atti- 
tude of  every  citizen  toward  the  body  politic. 

Nevertheless,  the  comparison  of  the  primitive  com- 
munities of  1850,  lacking  telegraphic  communication, 
telephones,  electric  lights,  trolley-cars,  elevators  and 
even,  to  all  practical  purposes  as  we  know  them  now,  rail- 
roads ^^  and  bath-rooms,  the  Mississippi  River  being  the 
western  boundary  of  accomplished  civilization,  with  the 
size,  the  form  and  the  speed  of  modern  community-life, 
gives  contrast  enough.  Let  it  be  remembered  that  the 
bulk  of  the  changes  since  then  have  been  the  result  of 
purely  material  forces:  not  only  those  of  mechanical 
ingenuity,  but  those  of  the  economic  management  thereof, 
of  consolidation,  of  organization,  of  unity  of  direction 
and  of  harmony  of  interests, — in  so  far,  at  least,  as  con- 
cerns the  barons  of  barter  whose  colossal  incomes  have 
constituted  the  seal  with  which  the  past  half-century's 
growth  has  been  stamped  into  symbol  and  significance. 
Then  will  it  appear  possibly  true  that,  compared  with  the 
changes  in  our  social  life  and  ideals  (in  outward  material 
aspect  as  well  as  in  inward  essence),  which  will  be 
inaugurated  by  the  elimination  of  barter  alone,  all  these 
which  we  and  our  fathers  have  seen  are  but  as  child's 
play.  For  the  present  it  is  enough  to  have  proven  that 
the  purely  industrial  "  boom  "  which  will  result  from  all 
cessation  of  this  present  search  after  "  business,"  of  try- 
ing to  induce  people  to  buy  who  need  no  inducement,  who 

13  It  was  then  a  long  day's  task,  and  a  very  fatiguing  one,  with  from 
three  to  seven  changes  of  cars,  to  travel  by  rail  from  New  York  to  Bi  ton. 
Now  five  hours  in   parlor-cars  and  "  diners  "  suffices. 


564  THE    COST    OF   COMPETITION 

are  overanxious  to  buy,  of  trying  to  increase  the  volume 
of  trade  by  restraining  one's  every  neighbor  from  trade, 
of  trying  to  swell  the  volume  of  trade  by  increasing  prices, 
— in  short,  the  expansion  of  production,  exchange  and 
consumption  which  will  result  from  all  cessation  of  bus- 
iness,— will  be  incomparably  greater  than  any  ever  yet 
recorded  in  the  history  of  commerce,  past  or  present. 

If  the  truth  of  these  statements  is  not  upheld  by  the 
analysis  which  has  preceded  them,  then  no  amount  of 
vague  argument  can  avail  to  that  end.  Can  anyone  fail 
to  believe  in  the  coming  of  the  change?  Can  anyone  re- 
gard it  as  distant?  Look  at  Fig.  12  (page  255),  at  the 
rate  at  which  economic  dissipation  is  coming  to  absorb 
practically  all  of  our  industrial  energies,  leaving  daily  less 
and  less  for  production !  Can  the  equilibrium  be  regarded 
as  stable,  even  now,  with  a  seventy-ton  cap-stone  supported 
upon  a  thirty-ton  foundation?  Does  it  seem  firm,  as  you 
look  at  it,  this  social  structure  of  ours;  or  is  it  not  already 
visibly  toppling, — not  swaying  bodily,  as  a  unit,  but  ob- 
viously crumbling  and  cracking  away  from  solidarity  at 
every  point  of  contact  between  man  and  man? 

Or  do  you  see  now  any  sign  of  lessened  speed  of  com- 
mercialization, as  the  years  pass  by?  Is  it  not  rather 
going  faster  and  faster  now  than  at  any  time  in  the  last 
half-century?  How  long  will  it  take,  at  the  rate  of 
growth  plainly  indicated,  for  this  present  seventy-to-thirty 
top-heaviness  to  become  a  case  of  ninety-to-ten,  say;  hope- 
lessly unstable,  its  center  of  gravity  far  outside  the  middle 
third  of  the  supporting  classes,  and  to  come  crashing  down 
in  social  revolution?  Let  those  who  choose  try  to  count  the 
years,  or  to  discount  them  !  Our  fate  is  plainly  imminent; 
near  enough  at  hand,  at  any  rate,  to  satisfy  those  who  have 
been  waiting  long  and  earnestly  for  the  coming  of  the  Lord. 


FUTURE    PROGRESS   WITHOUT    POVERTY      565 

Yet  more  needs  to  be  said  to  show  clearly  the  connection 
between  the  economic  analysis  and  our  conclusions. 
Given,  for  instance,  the  adoption  by  the  people  of  the 
plan  just  outlined  and  It  cannot  be  shown  that  the  most 
universal  selfishness  or  lack  of  altruistic  principle  in 
human  nature  could  operate  to  its  negation.  The  possi- 
bilities for  the  abstraction  of  wealth  from  him  who  pro- 
duces It,  either  directly  or  Indirectly,  reduce  to  a  single 
line  of  opportunity:  pure  peculation.  Of  this  we  have 
plenty  now :  defalcation,  embezzlement,  swindling,  bur- 
glary, robbery  and  petty  thievery,  in  spite  of  the  fact  that 
the  laws  of  the  land  declare  against  it.  But  in  regard  to 
it  three  distinct,  fundamental  things  must  be  said  before 
other  questions  regarding  it  can  be  considered: 

( 1 )  Its  total  volume  of  abstracted  wealth  Is  but  a  drop 
in  the  bucket  compared  with  that  regularly  and  legally 
taken  from  the  community  by  Economic  Dissipation; 

(2)  i\.ll  of  It  which  Is  classed  under  the  heads  of  public 
corruption,  defalcation  and  swindling  Is  but  one  form  of 
barter:  the  securing  of  wealth  by  cunning  rather  than  by 
production,  the  persuasion  of  some  weak  cat's-paw  to  pull 
the  chestnuts  out  of  the  fire.  When  public  opinion  and 
the  law  condemn  the  commercial  forms  of  barter  as  well 
as  the  criminal  forms,  they  will  for  the  first  time  really 
discountenance  the  latter. 

(3)  All  of  it,  whether  classed  under  Paragraph  2  or 
otherwise,  Is  Instigated  by  a  pressure  of  the  needs  of  life 
against  conscientious  scruples,  in  the  face  of  lack  of  oppor- 
tunity, which  is  due  wholly  to  the  presence  of  barter  and 
which  will  disappear  when  barter  becomes  illegal. 

The  truth  of  these  statements  Is  not  now  generally 
admitted.  It  is  In  this  sense  true  that  we  do  not,  as  a  com- 
munity-civilization, condemn  peculation.  We  draw 
between   the   criminal   actions   of   the  hired   cashier  who 


566  THE    COST    OF   COMPETITION 

embezzles  at  the  counter  and  the  equally  parasitical  but 
publicly  lauded  actions  of  the  hiring  financier  behind  him, 
a  distinction  too  fine  for  either  the  consciences  of  the  Ignor- 
ant and  the  tempted,  or  the  Intelligence  of  the  analyzing 
sociologist,  to  gain  any  true  guidance  therefrom.  There- 
fore we  have  to-day  an  enormously  larger  amount  of 
peculation  current  than  would  be  when  both  law  and  public 
opinion  condemn  all  artificial  fluctuation  of  valuations. 

In  this  attitude  public  opinion  Is  roughly  just  to  the 
individual,  although  unjust  to  Itself.  Society,  having  once 
told  the  business-man  that  profit-seeking  is  all  right,  that 
the  sole  way  to  secure  an  income  Is  to  get  everything  in 
sight,  no  fundamentally  wrong  principle  being  recognized 
therein,  should  be  neither  surprised  nor  shocked  If  the 
rest  follows  Inevitably.  Governmental  corruption  Is  as 
naturally  a  part  of  the  plan  as  is  poverty  and  prostitution. 
Only,  the  blame  having  been  removed  from  the  shoulders 
of  the  tempter  to  those  of  society,  as  the  true  originator. 
It  ought  likewise  to  be  lifted  from  the  tempted.  The 
anarchy,  the  no-law,  no  guiding-principle,  which  we  have 
made  the  basis  of  our  economic  system  should  be  Incor- 
porated into  our  criminal  law  also,  if  we  are  to  be  con- 
sistent, and  all  punishment  for  pecuniary  crime  be  abol- 
ished. Indeed,  the  Inevitable  tendency  In  that  direction 
has  already  been  noted,  as  an  actual  fact  of  the  present 
day.  But  to  accept  that  fact  without  protest  made  effec- 
tive In  reform  is  philosophical  and  practical  anarchy;  with 
which,  Indeed,  every  man  who  upholds  the  settlement  of 
prices  by  the  duello  of  competition  more  or  less  uncon- 
sciously allies  himself.  It  is  the  only  rational  and  stable 
abiding-place  for  one  who  fails  to  see  the  criminality  of 
all  profit-seeking,  outside  as  well  as  within  the  govern- 
ment, and  to  urge  Its  expurgation  from  our  legal  organiza- 
tion of  society. 


FUTURE    PROGRESS   WITHOUT    POVERTY      567 

The  Effect  of  the  Abolition  of  Barter  upon 
the  Individual.  Accepting,  then,  the  abolition  of 
barter  and  capitalism  as  feasible  at  will,  what  will 
be  the  economic  results  perceptible  in  the  life  of  each 
citizen? 

First  and  foremost,  the  enormous  expansion  of  the 
volume  of  trade  per  capita  will  inaugurate  a  tremendously 
increased  demand  for  productive  labor,  including,  of 
course,  the  arts  and  professions.  While  the  return  of  the 
energy  and  talent  now  absorbed  in  Dissipation  back  to 
production  will  increase  the  natural  aggregate  produc- 
tivity of  the  community,  as  measured  in  present  standards, 
by  some  threefold,  the  extent  of  demand  will  increase  by 
some  seven  to  tenfold.  For  the  first  time  in  economic 
history  the  demand  for  labor  will  really  exceed  the  supply. 
Wages,  including  the  salaries  and  fees  of  the  professions, 
will  expand  until  they  absorb  the  entire  production  of  the 
community;  interest,  rent,  dividends,  barter-cost  and  pro- 
fits will  take  nothing. 

The  alteration  in  the  position  of  the  producer  relatively 
to  the  rest  of  society  which  will  result  from  such  a  change 
is  imaginable  rather  than  definable.  To-day  he  is  a  beggar 
for  a  chance  to  labor;  "  capital  "  is  regarded  as  "  giving  " 
him  employment.  Being  a  beggar,  he  is  not  to  be  a 
chooser.  Humility  and  gratitude  are  assumed  to  be  his 
natural  moral  attitudes.  He  is  a  slave  to  circumstance 
or  institution,  if  not  to  man.  Nor  is  any  opportunity  lost 
for  making  him  remember  it:  for  when  he  does  he  meekly 
accepts  a  still  lower  wage. 

The  reversal  of  this  situation,  the  "  boom  "  in  growth 
of  self-respect,  self-confidence  and  power  which  will  swell 
within  him  when  the  demand  for  labor  really  exceeds,  in 
every  sense,  the  possible  supply,  belongs  more  to  the 
ethical  than  to  the  economic  half  of  the  argument.     But 


568  THE    COST    OF    COMPETITION 

in  picturing  future  evolution  it  is  very  difficult  to  dis- 
tinguish longer  between  the  two.  The  economic  side  of 
life  is  going  to  drop  so  completely  out  of  sight  as  a  con- 
trolling factor,  in  anything  like  the  insistent  prominence 
which  it  maintains  at  present.  With  the  aggregate  pur- 
chasing-power swollen  to  three  times  its  present  volume, 
and  for  the  individual  producer  much  more  than  that; 
with  every  man,  down  to  the  veriest  laborer,  choosing 
between  as  many  urgent  calls  for  his  efforts  as  there  are 
now  of  applicants  for  a  single  job,  the  supreme  master 
of  his  own  destiny,  unfolding  his  growth  in  intelligence, 
ability  and  taste  to  the  limit  of  his  physiological  birth- 
right; with  the  supply  of  the  necessaries  and  the  material 
luxuries  of  life  become  a  morning's  chore,  disposed  of  in 
a  few  hours,  a  wholesome  preface  merely  to  the  real  day's 
work,  then  become  quite  super-economic;  with  the  needs 
and  pleasures  of  life  no  longer  gauged  according  to  the 
vain  fashions  of  an  arbitrary  upper  class  or  to  the  com- 
parative acquisitions  of  one's  neighbor,  but  become  based 
upon  natural  tastes  and  desires — with  all  these  things 
become  the  premises  of  our  predictions,  the  unseen  foun- 
dations of  the  later  growth,  what  is  to  be  predicted  is  no 
longer  economics.  It  will  be  scientific,  artistic  or  moral 
progress.  The  economies  of  production,  then  under 
unified  control  over  the  entire  land,  will  have  been  refined 
beyond  the  present  possibilities  of  the  imagination,  as  the 
natural  result  of  perfectly  free  and  justly  paid  emulation; 
but  the  problems  which  it  currently  raises  will  have  taken 
on  a  purely  scientific  aspect,  no  longer  to  be  included  under 
the  word  economics  as  we  now  understand  it.  Economics 
now  means  both  production  and  the  open  question  of  get- 
ting one's  pay  for  it,  a  tread-mill  for  the  many,  a  gaming- 
table for  the  few.  Production  will  then  have  become  a 
pure  science,  largely  an  art,  and  the  pay  for  it  will  be 


FUTURE    PROGRESS    WITHOUT    POVERTY      569 

unconscious  of  measurement,  although  much  more  accu- 
rately measured  than  now.  Economics  now  means  poverty 
and  riches;  there  will  then  be  neither,  in  their  present 
sense.  All  will  have  the  riches  of  comfort,  competency 
and  insurance;  none  will  have  the  riches  of  wanton, 
unearned  luxury.  All  will  have  the  poverty  of  human 
weakness  in  the  face  of  fate,  the  unending  pathos  of  life, 
that  poverty  of  spirit  which  we  hope  to  "  have  always 
with  us,  that  we  may  do  for  it  what  we  may."  None  will 
have  that  poverty  of  opportunity  which  means  penury 
coupled  with  either  revolt  or  impassivity.  Economics 
now  means  the  questions  as  to  the  distribution  of  wealth; 
that  will  then  be  in  God's  hands,  the  material  foods  of 
life  then  apportioned  by  man  according  as  He  has  allotted 
to  each  his  gifts:  of  strength,  of  intelligence  and  of  virtue, 
each  its  own  reward.  And  if  the  spirit  should  prompt 
something  further  than  that,  the  allotment  to  those  who 
lack  strength  or  intelligence  of  some  extra  material  aid 
to  the  acquirement  thereof,  as  we  do  now  to  the  sick  and  the 
little  ones,  as  an  effort  at  compensation  for  their  lack  of 
better  enjoyment,  or  if  it  be  done  even  as  thriftily  profit- 
able to  the  welfare  of  the  state,  why  that  too,  thank 
Heaven,  is  no  longer  tedious  economics,  but  divinity  pro- 
claiming itself  at  home  in  man. 

As  for  the  rest  of  economics,  the  buying  in  the  cheapest 
market  and  the  selling  in  the  dearest,  with  all  which  that 
means,  that  too  will  have  vanished  forever.  Corpora- 
tions, soulless  and  mortal,  worthy  of  oblivion,  will  have 
attained  their  natural  end;  succumbing  to  apoplexy  or 
the  gout,  they  will  have  crumbled  into  dust.  The  agents 
and  the  promoters,  the  commercial  travelers  and  the  walk- 
ing-delegates, the  sandwich-men  and  the  curbstone  ped- 
dlers, all  of  them  poor  Wandering  Jews  of  modern  stamp, 
awaiting  not   hopelessly  His   coming  again   in  modern, 


570  THE    COST    OF    COMPETITION 

economic  guise,  knowing  no  homes  but  hotels  and  sleep- 
ing-cars, shop-counters  and  cheap  lodgings,  no  religion 
but  profit,  no  craft  but  cunning, — will  all  have  found  that 
Christ  has  indeed  returned  to  earth  and  will  have  lain 
down  to  rest  forever.  The  presidents  and  the  treasurers 
and  the  financiers,  of  this  corporation  and  that,  the 
brokers  of  their  securities,  now  no  longer  traded  on 
'Change,  themselves  no  longer  the  field  marshals  of  the 
war  over  valuations,  general  officers  of  a  valiant  army  of 
drummers,  lawyers,  clerks  and  weary  women-stenog- 
raphers, armed  all  with  paper  weapons,  arrayed  in  the 
majesty  of  a  gilded  puppet-law, — will  have  stolen  away 
to  lead  a  new  life:  the  organizers  now  of  real  productive 
industry,  true  superintendents  of  the  creation  of  Value, 
guiding  minds  to  a  work  which  is  become  at  once  an  art 
and  a  pastime,  a  pleasure  if  yet  a  duty,  a  profit  to  them- 
selves because  a  profit  to  all.  Strife  will  then  have  given 
way  to  peace,  organized  individual  pride  to  progress, 
private  profits  to  patriotism  and  to  preferment  in  public 
service,  enforced  antagonism  to  invited  co-operation. 
There  will  then  be  no  more  frantic  advertising.  The  bare 
bulletins  of  occasional  novelties  will  be  issued  by  the  true 
superintendents  who  manufacture  them,  bulletins  as  im- 
partial as  are  now  the  weather-reports,  and  naturally  more 
accurate. 

There  will  then  be  no  more  spies,  no  emissaries,  no 
lawyers,  no  commercial  travelers  to  organize  or  direct 
for  the  enticement  of  trade.  The  people  will  come  to  buy 
what  they  want,  and  when  they  no  longer  want  a  com- 
modity no  one  will  be  tempted  to  induce  them  to  buy  it; 
its  manufacture  will  be  discontinued,  to  no  one's  loss. 
There  will  be  no  more  undercutting  of  competitors,  no 
more  depreciation  of  the  other  fellow's  securities, — there 
being  no  securities  owned  by  any  fellow, — no  more  "  slic- 


Grant's  Tomb   and  the  Hudson  River 
"Let  us  have  Peace!" 


FUTURE    PROGRESS    WITHOUT    POVERTY     571 

ing  up  the  back."  No  more  franchises  will  be  for  sale. 
No  more  railroad  rebates  will  be  inviting  court.  No  more 
supplies  of  raw  material  will  need  to  be  corralled  and 
monopolized,  no  more  labor-unions  to  be  combined 
against.  Over  the  windows  of  the  Profit-seeker's  offices 
will  grow  the  cobwebs  of  neglect  and  into  his  heart  will 
slowly  steal  the  conviction  that  for  his  life-avocation  the 
advancing  world  has  found  no  further  use.  With  the 
declaration  of  peace  his  intensity  of  self-defense  will 
soften  into  more  generous  sympathy  with  those  in  other 
walks  of  life;  his  bitterness,  born  of  antagonistic  inter- 
ests, will  heal  into  unconsciousness;  the  cynic  or  the 
skinflint  will  melt  into  a  scientist,  an  artist  or  a  philan- 
thropist. 

To  him  who  regards  the  present  feverish  activities  of 
the  commercial  offices  of  the  congested  cities  as  the  soul 
and  symbol  of  modern  industry,  all  material  prosperity 
will  seem.  In  this  picture,  to  have  departed  from  the  land 
and  lethargy  and  decay  to  have  set  in.  The  grass  will 
gather,  be  cultivated  even,  In  lower  Broadway,  and  Wall 
Street  will  be  as  quiet  as  on  a  Sabbath  morning.  Central 
Park  will  have  grown  to  coalesce  with  the  Battery,  Man- 
hattan become  one  vast  public  garden,  dotted  only  here 
and  there  with  the  buildings  housing  the  people's  centers 
of  administration,  expressing  the  dignity  and  sturdy  seren- 
ity of  their  united  Interests  as  does  now  the  Capitol  at 
Washington.  The  waters  will  run  still,  but  they  will 
run  deep;  no  "business"  will  be  done,  but  the  people 
will  be  fed  and  sheltered  and  amused  and  Inspired  as 
never  before  in  the  history  of  the  world.  For  In  tele- 
phonic communication  with  these  quiet  centers  of  adminis- 
trative intelligence  will  be  the  real  productive  centers:  the 
factory-districts,  now  seeking  more  spacious  territory  than 
the    narrow    rocky    island,    the    mines    and    the    agrlcul- 


572  THE   COST   OF   COMPETITION 

tural  regions.  There  will  a  very  different  prospect  present 
itself:  Activity  unmeasurable,  in  present  units  at  least, 
urged  along  by  a  steady,  sturdy  vigor  of  emulation  barely 
suggested  by  our  present  fever  of  frantic  competition : 
Production  upon  an  enormous  scale,  with  supreme  effi- 
ciency, all  those  who  are  now  hindering  then  aiding  in  the 
work,  so  that  by  noon  or  after  a  half-week.  In  effect  at 
least,  all  Is  shut  down:  Invention  at  a  rate  of  which 
our  present  congested  Patent  Office  can  be  but  a  bare  sug- 
gestion: Design  of  a  beauty  now  unimaginable,  the  fruit 
of  a  nation's  first  free  expression  of  free-grown  taste,  no 
longer  stunted  and  poisoned  by  hired  demand  for  preten- 
sion and  pretense,  by  money  earnable  by  the  devising  of 
sheet-Iron  architecture,  Brooklyn-made  "  oriental "  rugs 
and  artificial  palms,  by  men  starved  into  readiness  to  do 
the  most  hideous  things, — a  taste  no  longer  forced,  in 
lack  of  any  national  unit-life  pressing  for  expression,  to 
borrow  both  ideals  and  themes  from  the  phallic  votarists 
of  ancient  Greece.  Of  noise  and  hurry  and  surplus  trans- 
portation there  will  be  none  at  all :  at  each  factory  the 
nation's  store  of  that  particular  produce;  near  each  city, 
but  not  in  it,  accessible  to  transport,  a  warehouse  stored 
with  the  city's  needs;  In  each  ward  or  precinct  a  retail 
bazaar,  a  World's  Fair  in  miniature,  a  modern  depart- 
ment-store swelled  like  a  popcorn,  for  supply  of  and  in 
touch  with  individual  needs.  From  these  finger-tip  per- 
ceptions of  popular  demand  will  go  back  to  the  local  ware- 
houses the  requisitions  for  supply,  no  longer  irregular, 
hesitating,  spasmodic,  based  upon  hopes  of  profit  or  fears 
of  loss,  varying  with  every  fluctuation  of  the  market,  with 
every  waver  of  capitalistic  cowardice,  but  as  steady  as 
human  needs,  as  strong  as  human  hunger.  From  the  city- 
warehouses,  the  nerve-centers,  the  requisitions  will  be 
passed  on  to  the  factories  themselves,  becoming  impulses 


FUTURE    PROGRESS   WITHOUT    POVERTY      573 

to  production  still  greater  and  more  forceful,  the  inte- 
grations of  such  a  myriad  of  local  impressions,  normally 
averaging  the  same.  Thus  will  they  reach  the  factory- 
stocks,  themselves  elastic  and  resilient,  and  result  in  pro- 
ductive activities  still  more  steady  and  forceful:  in  single 
shipments  of  maximum  quantities  of  goods,  at  most  per- 
fect periodicity,  with  the  utmost  directness  of  aim  toward 
the  consumer,  with  no  unnecessary  transhipments:  as 
fruit,  for  instance,  is  now  sent,  since  the  cooperative 
organization  of  its  market-intelligence:  wheat  being  no 
longer  rehandled  ten  times  and  sold  and  resold  seventy 
times  between  the  farmer  and  the  seaboard,  with  what 
additional  unnecessary  complications  before  the  finished 
bread  passes  the  laborer's  lips  no  man  may  hazard. 

Of  such  productive  industry  as  that  there  will  be,  in 
amount,  everything  which  unstimulated,  unvitiated  human 
appetite  can  desire.  Of  conscious  worry,  care  and  over- 
work, In  the  fear  for  one's  daily  bread,  there  will  be  noth- 
ing at  all.  In  its  Industrial  aspect  civilization  will  have 
reached  the  serenity  of  a  strong  middle  age,  the  prime  of 
life,  the  storm  and  stress  of  feudal  barter  relegated  to  the 
medieval  nineteenth  century  and  forgotten,  the  heritage 
of  a  dead  past  buried  In  that  past.  Man  will  have  break- 
fasted upon  the  fruit  of  his  industrial  evolution.  With 
that  digested  and  forgotten  he  may  first  rise,  in  his  divine 
strength,  as  a  lion  from  Its  lair,  for  the  true  day's  work 
before  him:  the  unhampered  conquest,  by  might  of  intel- 
lect and  of  faith  coordinated  and  cooperative  over  an 
entire  continent,  of  the  natural  obstacles  of  life:  the  unend- 
ing interrogation  of  Nature  in  science,  art  and  philosophy. 

This  is  the  duty  and  the  destiny  of  man.  Until  he 
ceases  his  quarrel  with  himself  and  undertakes  It  he  shall 
find  no  peace:  social  ulcerations  shall  afflict  him  to  his 
distraction.    To  clear  his  hands  to  its  undertaking,  to  ful- 


574  THE    COST   OF   COMPETITION 

fill  the  devoir  which  divinity  and  humanity  have  alike 
laid  upon  his  shoulders,  calls  for  the  same  simple  formula 
which  ended  the  quest  for  the  Holy  Grail:  the  giving  of 
food  to  the  hungry  and  of  ourselves  to  the  oppressed,  in 
our  united  address  to  a  single  task:  the  national  suppres- 
sion of  private  profit-seeking,  of  the  fluctuation  of  prices 
for  the  weak  by  the  strong. 

This  is  the  Standard  which  this  youngest  world-power 
of  which  we  are  a  part,  the  leader  of  the  empires  In  youth- 
ful vigor  and  humane  self-restraint,  should  be  proud  to 
raise  before  the  present  day  and  generation,  to  which  will 
flock  the  Wise  and  the  Honest  from  the  uttermost  corners 
of  the  earth,  to  the  end  that  our  national  justice  may  be 
upheld  and  the  human  race  furthered  toward  its  final 
goal.  Let  once  the  banner  be  but  displayed,  and  over  the 
result  need  no  man  worry.  The  deed  will  be  done  in  the 
love  of  man  for  man.  "  The  event  will  lie  in  the  hands 
of  God." 


VIII 
ETHICAL    SYNTHESIS 

"  THE    HERETIC."  i 

"  I  love  the  Lord ;  I  love  my  fellow-man ; 

Christ  the  gentle  I  adore. 
And  my  soul's  lowest  whisper  moves  me  more 

Than  hell  or  fears  of  dogma  can. 
What  creed,  then,  or  what  church  shall  hinder  me, 

What  power  presumptuous  place  me  under  ban. 
With  love  to  God  and  love  to  man 

And  eager  eyes  on  Christ  of  Galilee  ?  " 

IN  the  preceding  discussion  it  has  been  pointed  out,  at 
each  step  in  the  argument,  that  the  defects  visible 
in  society  as  it  exists  were  in  the  greater  part  due  to 
the  presence  of  a  single  false  institution.  It  was  also 
incidentally  to  be  inferred,  from  each  step,  that  if  this 
institution  were  removed  the  defect  would  disappear. 
This  concluson  is  the  siimmiim  bomim  of  any  such  an 
argument. 

It  is  not  possible  to  proceed  further  constructively  and 
to  say  just  what  form  of  ethical  growth  will  take  place 
when  the  brakes  are  removed.  We  know  too  little  about 
the  great  constructive  force  of  growth;  we  know  It  only 
by  its  limitations.  Nevertheless,  it  were  well  to  inquire 
a  little  further  as  to  what  more  general  conclusions  we 
are  justified  in  claiming.  Taking  for  granted  the  accuracy 
of  all  that  has  preceded,  what  light  does  It  throw  upon 
the  ethical  development  of  the  race?     What  part  of  its 

1  William  J.  Long,  in  The  Outlook. 
575 


576  THE    COST    OF    COMPETITION 

present  general  aspect  is  owing  to  competitive  action? 
What  additional  growth  may  be  expected  from  the  sub- 
stitution of  a  complete  system  of  cooperation? 

In  perusing  the  preceding  pages  the  impression  may 
have  been  gathered  that  the  conclusions  properly  to  be 
drawn  were  woefully  pessimistic.  The  evils  of  society 
were  pictured  as  distinctly  as  the  ability  of  the  writer 
would  permit.  Every  effort,  indeed,  was  made  to  convey, 
in  the  brief  generalizations  permissible,  a  strong  sense  of 
how  dark  our  present  civilization  is  on  its  dark  side. 

This  does  not  imply,  however,  that  the  dark  side  is  the 
only  one,  nor  even  the  major  one.  But  it  does  imply  that 
there  lies  plainly  at  our  hands,  in  the  near  future,  the 
unpleasant  task  of  a  national  house-cleaning,  a  political 
reorganization  of  a  sanitary  sort,  removing  gathering 
cesspools  of  waste  and  corruption  and  the  more  obscure 
origins  of  their  infection, — in  which  work  any  glossing 
over  or  concealment  of  taint  is  the  worst  hindrance 
possible. 

Bitter  criticism  will  be  aroused  by  the  stand  just  taken, 
that  the  warfare  of  commercialism  is  irremediable  except 
by  the  legal  declaration  of  peace.  It  was  stated  that, 
since  the  combat  is  already  on,  is  protected  by  law  and  is 
supported  in  principle  by  the  great  majority  of  citizens, 
it  were  better  waged  as  fiercely  and  expeditiously  as  pos- 
sible to  its  only  possible  end:  its  outlawry  by  statute,  by 
constitution  and  by  public  opinion.  In  this  way,  and  this 
alone,  lies  peace.  Because  of  this  it  will  be  misstated  that 
this  argument  favors  strife.  But  it  is  those  who  clamor 
for  immediate  peace,  regardless  of  unsettled  casus  belli, 
on  the  other  hand,  who  are  under  responsibility  to  show 
that  crying  "  Peace,  peace!  "  will  bring  peace  when  there 
is  no  peace;  that  it  will  not,  rather,  bring  more  war: 
underhanded,     desultory,    indecisive,     interminable    war, 


ETHICAL    SYNTHESIS  577 

most  profitless  of  all  effort,  instead  of  good,  sharp,  deci- 
sive onslaught. 

To  him,  then,  who  has  read  more  than  the  mere  typog- 
raphy of  the  preceding  pages,  all  this  must  have  been 
obvious :  that  there  lay  back  of  them  a  firm  faith  that  a 
wholesome  evolution  is  ever  in  progress,  that  things  have 
never  been  so  well  as  now  and  will  always  be  better  in  the 
future;  that  only  in  a  single  direction  does  cause  for 
uneasiness  lie.  In  that  direction  exists  a  downward  cur- 
rent in  the  otherwise  rising  tide  of  human  affairs.  There 
the  growth  of  a  tumor  upon  the  otherwise  wholesome  and 
vigorous  body  politic  calls  for  prompt  and  thorough  sur- 
gery; but  the  constitutional  vigor  of  that  body  politic  as  a 
whole  was  never  better. 

Yet  this  optimism  should  properly  be  expressed  more 
exactly.  This  is  an  age  impatient  of  irridescent  dreams: 
calling  for  accuracy  and  practicable  details  instead. 
Therefore  the  attention  is  called  to  these  following 
definite  ethical  propositions  as  corollaries  to  what  has 
preceded. 

Let  it  first  be  recognized  that  the  evolution  of  society 
does  not  follow  the  direction  indicated  by  the  conscious 
effort  of  its  individual  members.  It  was  not  conscious 
intention  and  effort  on  the  part  of  the  mid-European  bar- 
barians to  supersede  the  Roman  with  a  Western  civiliza- 
tion which  led  to  that  result;  they  were  merely  after 
plunder.  It  was  not  effort  looking  toward  the  independ- 
ence of  the  American  colonies  from  British  domination 
which  accomplished  that  fact;  it  was  merely  a  stand  for 
minor  rights  such  as  we  all  fight  for  almost  daily.  It  was 
not  concrete,  conscious  striving  after  the  abolition  of 
slavery  which  attained  it;  it  was  not  a  deliberate  plan  for 
American  expansion  into  the  Pacific  islands  which  brought 


578  THE    COST    OF   COMPETITION 

that  to  pass.  In  each  case  a  few  wise  heads  foresaw  the 
ultimate  result;  but  It  was  not  they  who  planned  or 
executed;  they  merely  predicted,  Cassandra-like,  in  the 
face  of  contempt  and  disregard.  The  people  who  did 
plan  and  execute,  officially  and  in  the  ranks,  were  at  the 
time  trying  to  do  something  else.  The  list  of  illustra- 
tions from  history  may  be  expanded  as  you  will;  they  will 
all  corroborate  one  another. 

Therefore  it  is  also  plain,  if  there  be  any  parallelism 
In  human  cause  and  effect,  that  men  are  not  to  be  brought 
to  be  good  and  happy  by  directly  trying  to  be  good  and 
happy.  Those  who  try  to  make  others  happy  always 
succeed.  They  make  them,  many  more  of  them  than  they 
had  hoped,  both  good  and  happy;  but  by  totally  different 
ways  and  means  than  they  had  planned.  The  most  futile 
of  all  follies  is  to  try  to  make  one's  self  good  by  puritanical 
effort,  or  to  hope  to  persuade  or  Induce  others  to  do  the 
same.  The  entire  history  of  mankind  stands  in  support 
of  this.  The  reaction  of  the  present  century  against 
Puritanism  Is  its  current  expression. 

Let  it  next  be  recognized  that  history  records  no  growth 
of  human  character  in  quality.  Growth  of  some  sort,  of 
course,  there  has  been,  continuously.  But  there  is  no  sign 
that  the  elevation  of  the  individual  human  character  has 
undergone  any  permanent  enhancement  with  the  passage 
of  the  centuries.  In  the  early  periods  of  English  history, 
in  the  earlier  Continental  barbarians.  In  the  first  stages  of 
any  of  the  previous  Mediterranean  civilizations;  In  the 
semi-civilizations  of  the  Aztec  and  the  Oriental  races; 
in  the  savage  tribes  of  North  American  red  men;  even  In 
the  higher  orders  of  lower  animals :  the  peaceful  horse 
or  dog  or  elephant  or  the  fierce,  carnivorous  lion, — in 
any  of  these  layers  of  life  the  more  prominent  Individuals 
are   marked   by   characteristics   which    we   spontaneously 


ETHICAL    SYNTHESIS  579 

and  unqualifiedly  call  noble.  King  Alfred  or  Bishop 
Anselm  we  are  forced  to  place  upon  a  perfect  par  with 
Abraham  Lincoln  or  Phillips  Brooks.  Nobility  of  char- 
acter, the  only  touchstone  by  which  can  be  identified  the 
highest  development  of  life  Into  true  naturalness,  is 
entirely  independent  of  accumulation  of  intellectual  attain- 
ments, of  degree  of  development  of  industrial  efl'iciency, 
of  absence  of  bloodshed,  or  of  refinement  of  aesthetic 
sense. 

There  have  been  ups  and  downs,  of  course,  in  the  his- 
tory of  character.  If  one  should  compare  the  average 
Italian  of  the  sixteenth  century  with  the  average  Anglo- 
Saxon  of  to-day  the  inference  must  be  that  there  has  been 
enormous  progress.  Then  all  was  luxury,  self-indulgence, 
worldly  ambition,  intrigue,  faithlessness  and  dishonor; 
assassination  and  sexual  incontinence  were  the  two  most 
prominent  social  institutions.  But  it  was  not  always  so 
with  this  place  or  race.  Go  far  enough  back  in  the  his- 
tory of  Rome  and  we  find  the  national  character  as  high, 
if  not  higher,  than  is  our  own  to-day.  Simplicity,  earnest- 
ness, industry,  generosity  and  the  highest  Ideals  of  duty 
and  honor  one  may  draw  from  their  records. 

So  it  is  with  our  own  race :  if  we  follow  back  the  history 
of  our  forefathers  to  the  days  of  Bede  and  of  Chaucer,  if 
we  wash  off  the  blood  and  the  mud  of  a  rough  and  primi- 
tive age,  in  close  contact  with  the  problems  of  animal 
existence,  vigorous  and  violent,  we  find  beneath  it  the 
utmost  purity  and  elevation  of  character.  Then  gen- 
erosity and  chivalry,  loyalty  and  honor,  moral  courage 
as  well  as  physical,  and  a  high  faith  in  the  invisible,  stood 
out  in  clear  bold  lines.  No  cowardly  creed  of  accu- 
mulated rules  of  conduct  overspread  and  dimmed  the 
hard  outlines  of  grim-visaged  duty;  no  intricacy  of  social 
organization  veiled  the  plain  responsibilities  of  the  Indi- 


58o  THE    COST    OF    COMPETITION 

vldual  to  his  fellows  and  to  his  God.  Their  ideas  of  cul- 
ture and  refinement  would  hardly  pass  on  Beacon  Street 
to-day,  but  their  standards  of  true  manhood  would  be 
hard  to  match  in  New  York  or  Washington. 

So  widespread  is  the  idea  that  growth,  the  universal 
avocation  of  all  living  things,  includes  growth  of  nobility 
of  character  that  it  is  necessary  to  include  this  denial  in 
the  premises. 

Plain  above  all  things  is  it,  however,  that  something 
has  grown.     If  not  character,  then  what? 

Three  things:  (i)  Numbers;  (2)  Institutions,  or  the 
method  of  association  of  these  numbers;  (3)  Refine- 
ment.    Taken  collectively:  Complexity  of  relationship. 

Of  these  three  the  basic  one  is  Institutions.  It  is  in 
these  alone  that  continuous  evolution  is  visible.  Upon 
the  stage  of  their  growth  depends  the  advance  in  both 
Numbers  and  Refinement. 

We  look  back  upon  the  fires  of  Smithfield  with  horror. 
Why  do  we  regard  them  so  differently  from  those  of  Mis- 
sissippi and  Delaware?  Then  was  associated  with  them 
the  highest  ideals  of  faith,  courage  and  constancy  to  duty 
which  man  has  been  able  to  attain:  men  and  weak  girls 
going  praying,  even  singing,  to  the  stake,  sons  encourag- 
ing fathers,  and  wives  husbands,  to  be  true  to  their  ideals 
though  the  flesh  be  consumed  in  torture.  What  have  we 
to-day  to  compare  therewith?  What  do  our  charred  and 
bloody  stakes  herald  to  the  world?  Weak,  passionate, 
ignorant  self-indulgence  on  either  hand:  of  lust  originally, 
in  the  victim;  then  of  cowardly  fear  when  the  retribution 
comes:  of  shameful  vengeance,  brutal  malignity,  rejoicing 
in  every  association  with  the  work,  on  the  part  of  the 
lynchers.  Not  one  atom  of  nobility,  of  dignity,  of  exalta- 
tion in  the  entire  proceeding! 

Wherein  can  there  here  be  found  any  sign  of  progress? 


ETHICAL    SYNTHESIS  581 

Simply  in  that  then  the  stake  was  a  formulated,  accepted 
institution  of  the  land;  now  it  is  the  remote  and  incidental 
fruit  of  an  institution.  Then  Bloody  Mary  was  en- 
throned; now  there  is  almost  a  price  upon  the  head  of 
Judge  Lynch. 

It  is  not  at  all  the  present  purpose  to  launch  into  a 
development  of  this  triple-headed  outline.  To  do  so  were 
to  undertake  a  volume  on  the  evolution  of  the  human  race. 
But  it  is  necessary,  before  anything  can  be  said  as  to  the 
effect  of  barter,  or  of  the  future  lack  of  it,  upon  individual 
ethics,  to  point  out  these  fundamental  propositions  con- 
cretely. They  cannot  possibly  be  understood  and  used 
constructively  upon  a  mere  bald  statement  of  them  such 
as  the  present  one;  but  they  can  be  formally  eliminated 
thereby  from  our  argument,  by  relegation  to  the  premises. 
In  these  pages  will  be  found  nothing  except  what  is  con- 
sistent with  them.  If  sympathy  be  expected  in  the  fol- 
lowing argument  with  the  vague,  popularly  prevalent  idea 
of  human  evolution  as  a  slow  current,  in  which  the  indi- 
viduals of  the  race  move  side  by  side  from  a  remote  past 
of  bestial  and  malignant  ferocity,  or  true  deviltry,  to  a 
roseate  but  remote  future  of  pink  cloudland  inhabited  by 
serene  and  benevolent  (but  quite  idle)  angels;  if  any 
encouragement  is  expected  for  the  belief  that  in  this  cur- 
rent those  who  are  ahead  are  those  who  started  first  or 
those  who  pressed  forward  most  diligently  and  properly, 
— then  let  that  hope  be  abandoned  and  the  book  closed. 
To  such  as  feel  in  this  way  only  the  primers  are  open; 
their  education  in  sociology  has  not  yet  begun.  This  is 
neither  a  primer  nor  an  album  of  iridescent  dreams 
(although  it  will  be  called  such).  It  is  a  study  in  cause 
and  effect. 

For  instance,  T  note,  in  an  editorial  in  an  able  weekly 
sheet,  the  walking-delegate  referred  to  as  "  in  a  barbaric 


582  THE    COST    OF    COMPETITION 

condition  which  is  simply  one  of  the  stages  of  progress 
from  brutes  to  something  better."  Nothing  could  express 
the  popular  idea,  among  the  people  who  worship  profit- 
seeking,  better  than  this.  Here  is  this  walking-delegate. 
He  is  one,  it  says  (most  charitably),  because  he  has  not 
yet  learned  better  than  to  be  one.  Formerly  he  was  some- 
thing worse:  of  that  race  of  criminals,  we  must  suppose, 
which  is  so  rapidly  and  so  obviously  becoming  extinct, — 
except  in  statistics.  Perhaps  he  is  descended  from  a  real 
devil.  Two  centuries  ago  people,  the  best  of  people, 
believed  in  them :  with  hoofs  and  horns,  with  forked  tail, 
blazing  eye  and  a  smell  of  sulphur.  No  doubt  there  were 
such  things  then, — for  there  must  have  been  something 
far  worse,  according  to  this  philosophy  which  I  condemn, 
than  anything  we  know  now, — become  extinct  since  by 
evolution  into  the  higher  forms  of  life:  probably  first  into 
less  malignant  banshees  and  hoodoos;  then  into  plain  crim- 
inals; then  into  walking-delegates,  trades-union  presidents 
and  socialists;  then  (since  these  latter  also  are  plainly 
becoming  extinct)  into  good,  submissive  never-striking 
working-people  (who  are  at  the  same  time  plainly  upon 
the  increase)  ;  finally  to  emerge  at  the  top  of  the  ladder, 
when  the  centuries  have  reached  the  end  of  the  roll  and  the 
millennium  shall  have  come,  as  captains  of  industry  or  of 
finance,  or  as  brilliant  corporation-lawyers.  There  and 
then  shall  appear  the  highest,  the  divine  type  of  Perfect 
Man,  golden-haloed,  crowned  with  a  wreath  of  coupons, 
symbol  of  triumph  over  evil;  amidst  most  radiant  sur- 
roundings :  endless  cloudland,  vaporous  with  the  accumu- 
lated moisture  of  past  ages  of  toil,  surcharged  with  prof- 
its, roseate  with  the  eternal  effulgence  of  endless  dividends, 
— wrung  from  whom  and  resting  upon  what  source  of 
radiated  energy  not  being  yet  explained  or  specified. 

O  wonderful  Golden  Age !  all  dividends  and  director- 


ETHICAL   SYNTHESIS  583 

ates,  with  grimy,  repulsive,  productive  labor  non-existent, 
not  even  needing  to  be  kicked  or  cursed!  Beautiful,  iri- 
descent dream!  Alas,  to  think  that  it  is  an  iridescent,  a 
lurid  dream,  that  it  must  be  abandoned  for  a  prosaic 
regard  for  cause  and  effect,  for  shackled  subservience  to 
natural  law,  such  as  of  conservation  of  energy;  for  sub- 
mission to  other  laws,  such  as  that  of  Form:  that  all  life 
is  molded,  inexorably,  by  its  environment  into  what  it 
is, — into  knight  or  villein,  crusader  or  saracen,  if  the  cen- 
tury be  the  twelfth,  into  pirate  or  puritan  if  it  be  the 
seventeenth,  into  walking-delegate,  promoter,  captain  of 
industry  or  other  commercial  creature  if  it  be  the  twentieth, 
each  hired  to  become  what  he  is  by  the  form  of  his  own 
times,  each  bred  and  fed  by  some  temporary  institution, — 
the  only  alternative  to  existence,  as  any  individual  may  find 
it  at  any  moment,  being  non-existence ! 

No,  life  is  not  a  limpid  current  of  progressive  individ- 
ualism, flowing  peacefully  from  spring  to  ocean,  from 
muddy  source  to  crystal  destination.  Life  is  the  tide  from 
the  unmeasured  deep  itself,  rising,  in  obedience  to  forces 
we  cannot  comprehend,  from  original  depths  of  pure 
unfathomable  formlessness,  to  well  over  the  virgin  earth 
and  to  be  molded  thereby  into  things  definable  and  meas- 
urable; to  know  for  the  first  time  Form  and  Progress, 
Up  and  Down,  In  and  Out,  Clean  and  Muddy.  In  that 
gross  tide  individual  men  are  but  the  fluid  atoms,  striving 
each  endlessly,  but  each  yet  borne  on  helplessly;  each  one 
incompressible,  elbowing  the  others,  exerting  his  proper 
fluid-pressure  outward,  never  for  one  instant  abandoning 
his  activity  in  action  and  reaction;  but  nevertheless  always 
fluidly  balanced,  ever  in  turbulent  whirlpool-equilibrium; 
tossed  upwards  as  another  goes  down,  depressed  as  another 
rolls  up  over  him;  now  at  the  top,  rejoicing  in  the  glisten 
of  foam,   In  sunshine  and  rainbow-colors,   tossing  sport- 


584  THE    COST    OF   COMPETITION 

ively,  boasting  freedom  and  superiority, — but  very  light 
and  volatile,  possessing  no  real  effectiveness,  evaporated 
in  the  first  warm  wind;  now  at  the  bottom,  in  eternal 
gloom,  under  fearful  pressure,  supporting  the  rest  thereby, 
moving  only  slowly,  in  long  swells,  in  enormous  volume, 
with  irresistible  energy,  tossing  the  visible  steamships  far 
above  with  its  invisible  vigor,  the  seat  and  the  store 
of  all  potentialities,  but  existing  eternally  in  silence. 
Now  life  flows  clear  and  pure  in  the  central  current, 
rejoicing  in  freedom  from  temptation;  now  it  rolls  soiled 
and  turgid,  crowded  upon  the  muddy  shore,  squeezed  into 
fetid  inlets,  absorbing  sewage,  doing  the  world's  endless 
work  of  cleansing:  which  is  done  always  by  absorption,  by 
living  and  by  dying  polluted  and  despised,  for  the  sins  of 
others. 

In  all  of  this  the  environment  which  forms  and  guides 
and  molds  each  mighty  current,  each  struggling  vortex, 
each  tiny  ripple,  is  the  system  of  channels  which  it  itself,  in 
the  ages  of  the  past,  has  carved  from  the  solid  earth.  In 
man  these  channels  are  his  Institutions,  chiseled  in  the  past 
from  the  flinty  foundations  of  existence, with  many  a  weary 
blow,  many  a  fiery  spark,  with  unending  combat;  modified 
now  by  the  reaction  from  each  twist  and  turn  they  give 
him,  but  in  the  main  shaping  irresistibly  the  destiny  of  the 
race  and  of  the  individual. 

So  like  unto  the  rising  tide,  invading  and  overcoming  the 
land,  is  man,  as  history  reveals  him :  never  twice  alike,  yet 
eternally  the  same;  always,  as  an  individual,  cast  back  upon 
itself  defeated;  always,  as  a  race,  ultimately  triumphant 
over  the  material  obstacles  which  oppose  and  fret  him; 
seething  with  currents  ever,  lashed  by  storms,  progressing 
by  waves,  antagonistic,  crest  towering  to  meet  crest,  cav- 
ernous troughs  intervening  to  maintain  equilibrium:  which 


ETHICAL   SYNTHESIS  585 

last,  since  crests  alone  are  desired,  is  so  very  hard  to 
understand,  so  very  reprehensible. 

In  this  vast  sea  of  fluid-life,  permeated  with  energy- 
transmissions  and  transformations,  no  form  arises  inex- 
plicably, without  commensurate  and  irresistible  cause.  The 
primary  guide  to  its  understanding  is  the  law  of  the  con- 
servation of  energy.  Every  college-graduate  knows  the 
letter  of  it.  How  many  know  the  spirit  of  it?  How  many 
statesmen  do?  The  secondary  guides  are  the  further  laws 
of  energetics.  They  should  constitute  the  fundament  of 
every  university-course  in  sociology. 

In  lack  of  these  the  world's  attitude  toward  human 
nature  as  visible  in  sociology  is  much  as  that  of  man  toward 
ghostly  manifestations:  superstitious.  Perceiving  some- 
thing uncanny  which  he  cannot  understand,  because  he  can- 
not identify  the  cause,  he  concludes:  "That  Is  a  fearful 
ghost !  "  He  so  reports  it  to  the  world,  which  shivers  in 
response.  So  the  ordinary  thinker,  the  jumper-at-conclu- 
sions,  the  man  most  frequently  heard  and  read,  perceiving 
some  untoward  social  phenomenon,  some  walking-dele- 
gate, some  trades-unionism,  some  violence,  some  momen- 
tary lack  of  equilibrium  in  the  social  vortex,  which  he  does 
not  like  but  which  he  Is  too  stupid  or  too  lazy  to  explain, 
exclaims:  "That  Is  natural  depravity;  that  Is  original 
sin!"  and  the  complacent,  self-sufiiclent  world  shudders 
in  sympathy.  Only  once  in  long  does  the  wee  small  voice 
arise  and  say:  "That  is  thine  own  handiwork.  Into 
such  turmoil  have  you  stirred  God's  footstool." 

Quite  different  is  the  attitude  of  him  who  believes  in 
the  law  of  the  conservation  of  energy,  knowing  that  noth- 
ing comes  from  nothing,  that  every  form  which  arises 
before  our  eyes  Is  forced  into  existence  by  an  original 
nucleus  and  a  favorable  environment.  Perceiving  the 
uncanny  or  the  unpleasant,  he  says  to  himself:    "That 


586  THE    COST    OF   COMPETITION 

must  have  some  explanation,  some  material,  commensu- 
rate, previous  cause,  only  by  removing  which  can  the 
unpleasantness  be  abated.  Therefore,  although  I  cannot 
yet  identify  the  nature  of  the  thing  or  its  cause,  will  I 
remain  in  peace  of  mind.  There  are  no  ghosts."  Per- 
ceiving the  social  perturbation  he  says,  in  similar  strain: 
"Original  sin?  Nonsense!  That  is  a  child's  subterfuge, 
a  mere  easy  name  for  the  real  cause,  offering  nothing 
toward  progress  to  a  solution.  There  is  no  original  sin, 
in  the  sense  of  a  thing  unknowable  and  irremediable. 
There  are  wrong  relations  between  men, — relations  not 
chosen  spontaneously,  giving  no  evidence  as  to  their 
human  nature  or  their  natural  attitude  toward  one 
another,  but  assumed  at  the  dictates  of  custom  or  law, — 
which  produce  friction,  heat,  distortion;  which  warp  into 
walking-delegates  or  commercial  travelers  or  "  grafters  " 
or  promoters,  men  who  would  otherwise  be  useful  citi- 
zens. When  I  can,  I  shall  ascertain  which  relations  are 
wrong  and  shall  change  them.  Until  then  let  me  reserve 
my  judgment  and  hold  my  peace." 

So  now  do  we  see,  having  approached  the  topic  in  this 
attitude  of  mind  through  chapters  of  previous  analysis, 
that  there  is  a  quite  visible  commensurate  cause  for  the 
greater  part,  if  not  for  all,  iniquity.  For  the  rest  we  may 
reserve  faith;  but  of  this  we  are  palpably,  absolutely 
sure: 

That  all  want,  the  great  bulk  of  all  crime  and  an  enor- 
mous proportion  of  all  sin,  sorrow  and  ugliness,  are  the 
inevitable  fruit  of  a  single  artificial  and  irremediable,  but 
destructible,  institution:  Barter. 

This  institution  we  have  inherited  from  a  brutal  past, 
when  it  was  originally  useful,  into  an  age  when  its 
anachronism  is  the  germ  of  all  social  disease;  and  the 


ETHICAL    SYNTHESIS  587 

symptom  of  social  disease  is  individual  sin.  It  is  the 
duty  of  the  twentieth  century  to  rid  us  of  this  burden. 
No  pulpit,  no  missionary,  no  rostrum,  no  university-chair, 
no  independent  press,  may  boast  of  furthering  secular  aid 
to  moral  progress  which  does  not  aim  its  work,  more  or 
less  directly,  to  this  ultimate  goal.  When  it  strikes  in  that 
direction  it  can  be  absolutely  certain,  for  the  first  time, 
that  it  is  decreasing  the  sum  total  of  all  sin  and  suffering 
in  the  world. 

This  is  rational  optimism.  Such  would  be  true  con- 
structive sociology.  Hitherto  has  been  only  blind  grop- 
ing, after  facts,  after  accumulation  of  past  accomplished 
facts;  no  adequate  explanation  of  the  past,  no  accurate 
prediction  for  the  future,  no  guidance  in  doubt,  no  funda- 
mental faith,  no  universal  principles.  As  preliminaries, 
all  these  facts  are  necessary,  no  doubt.  But  if  their  fruit 
is  to  be  only  knowledge  of  what  is  not,  of  nothingness,  of 
doubt  and  skepticism,  of  conservation  of  all  which  we  now 
have,  whether  good  or  bad,  because  of  fear  to  take  a  step 
forward  off  the  beaten  path, — if  it  is  to  breed  only  fear, 
paralysis  and  depression  of  spirits, — then  it  were  better 
not  to  have  been. 

Huxley  says  that  if  all  which  science  might  be  expected 
to  bring  to  us  were  its  accumulation  of  material  facts,  if 
it  had  to  offer  no  hopeful  deductions,  no  broad  principles 
of  truth,  extending  far  beyond  our  microscopic  selves  into 
the  material  infinite,  it  were  better  for  the  human  race,  as 
well  as  for  science,  not  to  have  been.  If  such  were  the 
ultimate  achievement  of  the  Baconian  philosophy  and  its 
resultant  civilization,  the  race  might  better  commit  suicide 
at  once.  For  its  facts  are  terrible  ones :  recording  chiefly 
struggle,  disease,  suffering  and  death.  The  population  is 
greater  because  of  its  aid;  the  death-rate  is  less.     But 


588  THE    COST    OF    COMPETITION 

there  seems  not  to  be  one  atom  of  decrease  in  human 
suffering — of  mind,  at  least,  if  there  has  been  of  body. 

If  all  that  sociology  has  to  lay  at  our  feet  is  vast  heaps 
of  statistics;  of  births,  deaths,  dollars  and  crimes,  lugu- 
brious Malthusian  doctrines,  brutal  survivals  of  those  most 
fit  to  bargain, — if  it  can  find  no  hope,  no  certainty,  of 
aught  else  or  better, — then  it,  too,  were  better  to  pass 
away  at  once  into  interminable  oblivion. 

If  all  that  religion  has  to  bring  to  us  is  exhortation, 
to  fight  on  endlessly  against  the  burden  of  an  original  sin 
to  which  we  were  condemned  unborn,  unsinning,  if  all  it 
can  give  is  the  consolation  of  endurance  in  prayer,  then 
also  were  the  suicide  of  religion  better.  For  the  religious 
statistics,  too,  are  depressing.  Take  each  man  away  from 
his  fellows,  like  a  grain  of  sand  separated  from  a  pile, 
and  what  improvement  does  he  show,  on  the  average,  after 
all  these  centuries  of  Christian  influence?  Do  not  the 
statistics  show  as  much  sin  and  crime  as  ever?  Are  not 
the  missionaries  more  active  than  ever,  abandoning 
Borrioboola-Ga  until  Mulberry  Bend  shall  have  been 
somewhat  improved?  Has  there  been  any  Improvement 
in  average  rectitude  or  strength  of  character? 

To  ask  this  question,  most  seriously,  is  not  pessimism. 
Even  to  answer  it  negatively,  as  has  been  done  here,  is  not 
pessimism.  To  be  really  pessimistic  is  to  assume  that 
these  are  the  only  lines  in  which  progress  is  possible;  for 
it  takes  little  agument  to  show  that  along  them  there  has 
been  no  visible  progress  in  the  past.  True  optimism  is  to 
show  that  this  is  true,  but  to  also  show  that  there  are  other 
lines  in  which  progress  is  easy;  that  is,  as  easy  as  whole- 
some life  ever  is. 

What  social  progress  man  has  made,  aside  from  the 
accumulation  of  material  knowledge,  has  been  in  the 
evolution  of  his  institutions,   in  the  development  of  his 


ETHICAL    SYNTHESIS  5S9 

legal  relations  with  his  fellows,  in  the  gradual  substitu- 
tion of  political  and  industrial  cooperation  for  mutual 
antagonism  or  ignorance,  whereby  greater  numbers  have 
been  enabled  to  live  and  be  reasonably  good,  whereby  his 
weaknesses  and  his  vices,  although  ever  present,  have 
become  less  effective  against  his  own  and  his  neighbor's 
happiness,  while  his  higher  tendencies  have  become  more 
and  more  effective  toward  peace  and  plenty.  Men  have 
been  exhorting  each  other,  in  oration  and  sermon,  to  be 
unselfish  ever  since  history  began.  But  man  has  become 
unselfish,  as  the  centuries  rolled  by,  not  in  proportion  to 
the  amount  or  intensity  of  exhortation  applied,  not  by  any 
alteration  in  the  internal  physiognomy  of  the  individual, 
but  by  and  to  the  degree  in  which  institutional  environ- 
ment has  permitted  and  incited  the  unselfish  to  survive 
and  to  possess  power  and  has  condemned  the  selfish  to 
extermination. 

There  is  no  more  possibility  of  cure  by  prayer  or 
exhortation  in  ethical  delinquency  than  there  is  in  physical 
illness;  there  is  no  more  Christian  science  in  morals  than 
in  medicine.  In  each,  faith  and  courage  play  a  very 
important  part,  in  the  aid  they  lend  to  the  one  fighting 
for  life;  but  in  each  sort  of  fight,  while  praising  God,  one 
must  keep  one's  powder  dry.  It  is  the  chief  office  of  this 
Second  Part  of  the  argument  to  supply  this  necessary 
factor  of  faith  In  sociological  thought,  to  assure  that  cure 
is  possible,  is  certain, — in  the  face  of  what  seems  an 
almost  universal  lack  of  any  such  faith  among  the  most 
prominent  in  the  land.  Without  it  statistical  facts  are 
dead  and  useless — as  useless  as  is  surgical  aid  to  a  man  who 
does  not  wish  to  live. 

Absorb,  then,  this  faith:  that  if  the  hard-headed  execu- 
tive people  of  the  world  will  only  adopt  the  lesson  of  this 
economic   analysis,   most  cold-bloodedly  even,   and  effec- 


590  THE    COST    OF    COMPETITION 

tively  abolish  barter,  the  utmost  in  the  way  of  ethical 
development  possibly  to  be  hoped  for  will  inevitably 
result.  Give  all  men  bodily  comfort  and  mental  peace, — 
properly  to  be  attained  only  by  hard,  earnest  work  of 
a  useful  kind,  but  to  be  thoroughly  assured  thereby, — 
freedom  to  work  profitably,  to  marry  deliberately,  to 
choose,  to  study  and  to  grow  somewhat,  in  mind  and  body; 
to  develop,  in  short,  both  muscle  and  intellect  along 
natural,  spontaneous  lines;  do  this  and  you  will  unavoid- 
ably have  produced  in  them  the  highest  possible  moral 
development.  It  is  already  too  long  that  we  have  said 
to  ourselves:  "  Go  to;  let  us  be  cultured!  "  with  a  head- 
long plunge  forthwith  into  Ruskin  and  the  Mahabharata. 
We  are  beginning  now  to  learn  that  it  produces  only  self- 
consciousness  and  superciliousness.  It  is  much  too  long 
that  we  have  said  to  others:  "  Come,  thou!  It  is  thy 
duty  to  regenerate  and  develop,  to  become  appreciative 
and  creative "  ;  with  a  helpful  upward  yank,  when 
response  seems  slow,  by  the  scruff  of  the  neck;  by  means 
of  missions,  college-settlements,  presented  art-galleries; 
by  boys'  clubs  which  discourage  fisticuffs  and  shop-girls' 
leagues  offering  no  dancing,  no  young  men,  aged  Sir 
Herbert  and  Sir  Matthew  being  supplied  instead;  by  all 
sorts  of  social  porous  plasters,  poultices  and  hot  baths 
applied  externally  and  gratuitously  to  the  body  politic, — 
in  place  of  moderate  hours,  good  food  and  fresh  air, 
instead  of  the  self-respect  which  grows  only  from  reliance 
upon  self  for  support  and  for  amusement  and  from  pri- 
vacy of  exercise  of  taste.  For  those  who  supply  all  these 
medications  it  is  well,  in  lieu  of  some  better  God's-work. 
It  takes  them  a  bit  out  of  themselves,  albeit  leaving  a 
mighty  taste  of  self-importance,  of  righteous  beneficence, 
very  far  from  true  devotion,  in  the  mouth.  For  those 
treated  it  also  accomplishes  something,  chiefly  in  the  way 


ETHICAL    SYNTHESIS  591 

of  distraction:  a  counter-irritant  to  their  other  ills.  Of 
true,  natural,  wholesome,  permanent  development  it 
brings  not  one  atom  to  either  party. 

Why  not  reverse  the  plan?  Why  not  remove  from  the 
necks  of  these  people  the  burdens  which  we  ourselves 
have  placed  there,  which  are  bending  and  breaking  them 
until  they  need  external  support?  Why  not  remove  the 
pressure  which  grinds  out  all  leisure  for  a  more  spon- 
taneous formation  of  mothers'  clubs  or  for  learning  that 
they  are  unnecessary,  all  taste  for  spontaneous  reading 
or  seeing,  all  spare  cash  for  the  good  things  of  life,  all 
quiet  wholesomeness  of  selection  in  even  those  things 
which  are  attainable?  Why  not  let  them  live  naturally, 
under  what  pressure  against  an  unconquered  natural 
environment  the  Lord  has  decided  to  be  wholesome,  pro- 
ducing only  keen  zest  for  its  conquest, — not  under  any 
artificial  pressure  whatever  from  their  fellow-men, — and 
see  if  life  will  not  bud  spontaneously,  rapidly;  a  bit 
crudely,  at  first,  perhaps,  unabsorbed  cotyledons  being 
somewhat  prominent  yet,  but  turning  with  true  instinct 
toward  the  sun  and  toward  support  for  climbing;  demand- 
ing libraries  and  art-galleries  faster  than  we  can  supply 
them;  leaving  us  no  time  for  the  issue  of  invitations,  for 
the  declaration  of  drafts,  into  the  "  volunteer  "  army  of 
seekers  after  Culture;  even  pushing  us  soon  for  our 
supremacy  in  these  matters,  showing  clearly  that  tumultu- 
ous crimson  blood  is  more  creative  than  our  thin  blue 
stuff,  that  our  universities  and  our  canons  of  taste  exclude, 
rather  than  breed,  rising  genius;  that  altogether  there  is 
a  newer,  higher  order  of  things  in  store  for  the  human 
race,  to  come  out  of  the  vigorous  and  the  unlovely,  than 
is  dreamed  of  in  all  our  pedantic,  condescending  philos- 
ophy? 

To  sow  the  seed  for  all  this  is  the  office  of  economic 


592  THE    COST    OF    COMPETITION 

analysis.  Ethical  development  may  arise  only  from 
economic  forces.  Accomplished  ethics  become  valuable 
only  in  creating  again  economic  results.  Between  butter- 
fly and  butterfly  must  always  intervene  the  worm.  No 
like  produces  immediately  like.  No  form  of  energy  can 
create  its  own  form :  a  double  intermediate  transforma- 
tion alone  can  bring  back  the  old  source  into  new  product 
of  a  like  but  higher  order.  It  is  a  fundamental  law  of  all 
Form.  The  pendulum  must  always  swing,  swing,  swing: 
from  high  to  low,  from  low  to  high;  from  egg  to  swan, 
from  swan  to  egg;  from  infantile  barbarity  to  adult 
beauty,  from  the  dignity  of  whitening  hairs  back  headlong 
into  childishness,  decay  and  the  travail  of  renaissance; 
from  struggling  conquest  of  a  virgin  land  to  affluence, 
leisure,  science  and  art;  from  Immortal  schools  of  Olympic 
genius,  recording  generations  of  life,  of  experience,  of 
strength  and  pathos  in  incorruptible  monuments,  back 
again  into  barbaric  chaos,  into  medieval  death  and  dark- 
ness: grim  witnesses  to  a  nation's  death,  repulsive  inci- 
dents to  a  People's  birth. 

"June,    December;     December,    June! 
Hast    thou,    then,    no    other    tune?" 

Cannot  the  roses  of  summer  cease  to  fade,  can  they 
never  sow  themselves  from  the  blossom,  in  the  air  and 
sunshine,  without  recourse  to  dead  seed  and  the  cold,  dark 
earth?  Must  the  winter  ever  intervene  between  flower 
and  flower?  Can  art  never  perpetuate  itself  as  art,  by 
artistic  effort  and  inspiration,  blooming  perennially, 
accumulating  ever?  Is  it  really  true  that  the  study  of 
the  beautifully  produced  can  never  produce  the  beautiful? 
Is  it  relentless,  this  law  that  art  is  but  the  expression  of 
life,  coming  always  after  life,  as  a  fruitful  blossom,  strong 
as  the  life  is  strong,  as  beautiful,  as  fascinating,  as  seduc- 


ETHICAL    SYNTHESIS  593 

tive  as  the  strong  life  which  bred  it  is  repellant,  hard  and 
self-sacrificing? 

Is  it,  then,  inexorably  true  that  ethics  never  breed 
ethics,  that  high  moral  growth  comes  only  after  high 
material  prosperity:  not  the  fever  of  high  prices  and  over- 
confidence  now  known  by  that  name,  but  true  prosperity 
for  all  individuals,  of  work  enforced  but  not  overstrained, 
of  bodies  fed  and  warmed  but  not  gluttonized,  of  certain 
shelter  from  all  human  attack  but  not  of  pampered  fear 
of  all  contact  with  the  winds  of  Heaven?  Are  all  ser- 
mons, exhortations  and  Ideals  really  futile,  then,  except 
as  they  remind  us  to  respect  human  liberty? 

Such  is  the  law.  Those  things  which  we  seek  we  must 
turn  our  backs  upon.  Not  in  romantic  knight-errantry  is 
rewarded  the  quest  for  the  Holy  Grail,  but  where  the 
giver  gives  himself  to  the  destitute  and  feeds  the  Three. 
Not  in  crusades  against  Jerusalem  is  found  the  Christ, 
but  In  homely  daily  tasks  well  done. 

"  Hew  the  stone  and  you  will  find  me. 
Cleave   the   wood,   and   there   am   I !  " 

Not  In  the  schools  and  art-galleries  is  to  be  found  the 
true  creative  genius.  Every  artist  has  had  to  flee  them 
before  he  began  to  succeed,  to  learn  even.  The  great 
builders  of  science  and  philosophy  have  ever  risen  over 
them,  not  by  them.  Only  from  reverent  study  of  brute 
nature  at  first  hand  did  genius  ever  arise:  mighty,  crea- 
tive, immortal. 

Further,  this  relentless  law  Itself  Is  the  sole  foundation 
of  the  highest  human  development.  The  highest  thing 
In  man  is  faith.  The  seed  of  faith  grows  in  temporary 
darkness.  It  is  In  the  night  that  we  learn  to  await  the 
dawn,  in  January  that  we  appreciate  July,  in  storm  that 
we  are  reminded  that  the  sun  always  shines. 


594  THE    COST    OF    COMPETITION 

Not  that  unillumined  adversity  is  the  sole  food  for 
growth.  If  unending  light  never  breeds  faith,  unending 
darkness  kills  all  hope.  It  is  neither  in  the  perpetual 
summer  of  the  tropics  nor  in  the  endless  winter  of  the 
poles  that  the  highest  life  blossoms.  It  is  where  the 
alterations  are  the  most  frequent,  sharp  and  varied,  where 
day  and  night,  summer  and  winter,  hill  and  valley,  sea 
and  land,  work  and  play,  industry  and  art,  alternate  for 
each  individual  in  the  greatest  diversity,  that  the  highest 
civilization  arises. 

Where  the  alternations  are  the  most  frequent  there  are 
the  transformations  most  frequent  and  varied:  from  rest 
to  exertion,  from  warfare  to  decorative  art,  from  ugly 
crudity  to  refined  beauty,  from  ethics  to  economics,  from 
labor  to  faith, — there  the  swings  of  the  pendulum  beat 
forth  the  fullest  life.  Each  double  swing,  each  transfor- 
mation and  its  reaction,  constitute  one  step  upward 
toward  life's  highest  goal.  Only  through  such  oscilla- 
tory escapement  does  the  pent-up  energy  of  potentiality 
for  life  find  visible  motion  and  measurement. 

Therefore  has  this  lesson  been  presented  in  double 
form,  for  adoption  to  what  extent  one  pleases,  yet  with 
equal  certainty  of  final  result;  treating  first  of  bare 
economic  forces,  sure  to  blossom  into  ethical  fruit,  if  once 
planted,  in  Part  One;  of  forecast  of  such  fruit,  of  help- 
ful watering  of  the  seeded  soil,  hastening  and  facilita- 
ting growth,  forefending  stunting  or  distortion  by  too  vio- 
lent contact  with  resistance  to  expansion,  in  Part  Two. 
Taking  the  two  portions  together,  this  simple  little  moral 
do  they  point  and  have  pointed  repeatedly: 

That  mankind,  to  a  degree  far  greater  than  has 
hitherto  been  supposed,  is  as  good  as  it  is  permitted  to  be; 

That  at  all  times  some  individuals  are  forced  to  be  bad 
and  some  are  permitted  to  be  good; 


ETHICAL    SYNTHESIS  595 

That  the  forces  which  coerce  the  bad  into  their  wicked- 
ness are  set  into  motion,  unconsciously,  by  the  good; 

That,  therefore,  ignorance  is  as  much  a  sin  as  is 
malice; 

That,  therefore,  most  rigidly  is  it  true  that  each  is  his 
brother's  keeper; 

That  economic  forces,  constructive  or  destructive, 
always  produce  ethical  results  correspondingly  good  or 
bad,  and  that  they  are,  indeed,  the  only  source  of  ethical 
results;  that  ethical  results  react  to  originate  economic 
forces;  and  that,  in  finality,  ethical  forces  are  ethically 
valuable  only  within  the  individual  in  which  they  arise, — 
lending  him  happiness  but  no  one  else,  they  being  non- 
transferable, non-negotiable  and  perishable  with  him :  in 
short,  not  a  social  phenomenon  at  all,  but  an  individual 
one,  illumining  the  few  about  him  with  a  warmth  of 
moral  glow  but  leaving  in  outer  cold  and  darkness  the 
millions  reached  by  his  economic  acts.  The  only  social 
ethics  are  those  aimed  at  the  economic  betterment  of  all 
other  individuals,  impartially;  the  only  social  economics 
are  those  calculated  to  produce  ethical  good.  In  other 
words,  that  preaching  to  men  to  be  good  and  industrious 
will  not  make  them,  as  a  body  or  to  a  greater  fraction, 
either  sinless  or  productive;  but  that  by  giving  to  them 
the  chance  to  be  industrious,  and  with  it  the  full  product 
of  their  toil,  they  will  become  highly  productive,  while  the 
goodness  will  take  care  of  itself. 

The  welfare  of  the  community  is  the  only  object  for 
each  man's  efforts  which  may  effect  results,  either  for  the 
community  or  for  himself.  So  long  as  he  seeks  his  own 
ends  he  must  inevitably  fail  of  attaining  them.  So  soon 
as,  and  as  far  as,  he  casts  in  his  lot  with  his  fellow-men, 
in  his  week-day  acts  "as  in  his  Sunday  professions,  not  to 
the   subdivision    of   all    property   but   the   opposite,    not 


596  THE    COST    OF    COMPETITION 

abandoning  that  Individual  control  of  his  own  deeds 
which  Is  his  god-head,  nor  that  control  of  the  things  he 
needs  to  do  with  which  is  his  mundane  right,  but  of  the 
fruits  of  his  toil,  casting  them  all  Into  the  common  fund 
and  taking  from  It  what  the  community's  sense  of  justice 
says  Is  his,  placing  his  faith  where  Jesus  of  Nazareth 
placed  it  and  taking  no  heed  of  what  he  shall  eat  or  what 
he  shall  wear  beyond  taking  all  heed  possible  of  what  the 
community  shall  eat  and  wear,  placing  his  faith  In  a  just 
remuneration  for  what  he  does  where  Washington  and 
Lincoln  and  every  other  patriot,  down  to  each  private  In 
the  ranks,  has  placed  it  since:  with  the  people, — then  and 
to  that  degree,  and  not  before  or  more,  shall  each  and 
every  one  of  the  people  be  fed  and  clothed  and  amused 
and  inspired  as  never  before  in  the  history  of  man- 
kind. 

For  such  Is  the  case  to-day.  Seven-eighths  of  the  people 
do  just  this  thing,  patiently,  ploddingly,  with  faith,  resig- 
nation and  a  wonderful  measure  of  content,  doing  what  is 
laid  to  their  hands  to  do,  taking  as  their  natural  reward 
what  Is  awarded  to  them, — and  accomplishing,  In  all  this, 
all  productivity  of  material  good  which  Is  accomplished 
anywhere.  Human  nature  thus  proves  Itself  to-day 
entirely  capable  of  doing  all  which  has  just  been  called 
for.  The  only  flaw  in  the  present  result  lies  in  the  fact 
that  these  altruistic  laborers  comprise  only  seven-eighths 
of  the  whole,  that  they  accept  not  what  the  entire  com- 
munity, but  what  the  other  eighth,  awards  to  them;  and 
that  the  other  eighth,  comprising  the  most  capable  in  the 
land  and  representing  seven-tenths  of  Its  Industrial 
ability,  being  richly  hired  and  strenuously  applauded  for 
doing  very  differently  from  the  altruistic  masses,  does  take 
all  heed  of  what  it  shall  eat  and  what  it  shall  wear  as 
individuals,  with  no  thought  of  the  welfare  of  the  com- 


ETHICAL    SYNTHESIS  597 

munity  or  of  any  responsibility  therefor.  But  it  does  so 
only  because  it  knows  no  better  way,  and  not  because  of 
"  human  nature,"  not  because  it  wishes  to;  and  when  once 
shown  that  material  as  well  as  spiritual  welfare  lies  in  the 
opposite  direction,  will  offer  little  resistance  to  leaving  its 
wearisome,  luxurious  strife. 

This,  then,  is  the  lesson  of  unfathomable  hope  to  be 
drawn  from  an  analysis  such  as  this :  that  to  rid  the  world 
of  sin  and  sorrow  we  need  no  longer  rely  upon  exhorta- 
tive reformation  of  the  individual  character.  For  cen- 
turies that  process  has  been  furthered  with  all  the  zeal 
of  the  saints  and  martyrs.  In  so  far  as  it  has  found 
expression  in  the  christianization  of  our  political  institu- 
tions, in  the  foundation  of  our  common  law  upon  the 
principle  that  all  men  are  brothers,  it  has  borne  rich  fruit; 
it  has  been,  indeed,  the  keynote  of  the  progress  of  civiliza- 
tion. In  so  far  as  it  has  confined  itself  to  its  declared 
purpose,  the  reformation  and  exaltation  of  the  individual 
spirit,  its  fruits  are  almost  invisible.  In  proportion  to  our 
material  prosperity,  to  our  fair  chance  to  be  good,  there 
is  now  more  crime,  more  sin,  more  laziness,  more  poverty, 
more  unhappiness  and  a  greater  lack  of  common  faith 
abroad,  among  the  individuals  of  the  Christian  nations, 
than  there  ever  was  before;  at  least,  there  Is  no  less.  If 
our  modern  hospitals,  asylums  and  organized  charities 
bear  witness  to  the  growing  Christianity  of  the  state  on 
Its  one  side,  the  slums  and  the  "  Tenderloins  "  bear 
heavier  witness  that  its  growth  is  Incommensurate  with 
the  growing  need  for  It.  If  evangelism  is  raising  hun- 
dreds out  of  crime  Into  patient  submisslveness  every  day, 
economic  pressure  is  daily  crowding  down  thousands  out 
of  contentment  into  revolt.  If  evangelism,  if  direct  appeal 
to  the  individual's  moral  control  of  his  own  acts,  Is  our 
only  hope  for  progress,  then  are  we  hopeless;  humanity 


598  THE    COST    OF    COMPETITION 

must  have  already  reached  and  passed  its  zenith  and  be 
now  sinking  slowly  into  senility  and  decay. 

But  evangelic  exhortation  is  not  our  only  hope.  It  is 
not  even  any  hope  for  more  than  staying  the  downward 
drift,  for  the  active  progress  of  the  race;  although  it  may 
be  for  the  momentary  comfort  of  the  individual,  teaching 
him  more  patient  endurance  of  unnecessary  pain.  It  is 
because  we  have  been  expending  our  best  striving  for  a 
higher  life  in  that  most  mistaken  of  ways  that  our  progress 
has  been  slow  or  backward.  It  is  because  we  have  sought 
too  diligently  for  the  mote  of  sloth  or  malice  in  our 
neighbor's  heart,  and  too  idly  the  beam  of  willingness-to- 
barter  in  our  own,  which  has  caused  the  trouble,  which 
explains  how  the  beam  grows  daily  larger  while  the  mote 
remains  no  whit  less.  It  is  because  we  have  thrown  to 
the  winds  alike  the  teachings  of  the  Nazarene  and  of 
evolutionary  science  that  we  grope  and  stumble.  It  is 
because  we  have  mistaken  man  as  the  sov^ereign  of  his 
environment,  whereas  he  is  its  creature,  that  we  have 
failed.  It  is  because  we  are  judging  others,  instead  of 
devoting  ourselves,  that  comes  now  the  judgment  heavily 
back  upon  us. 

But  the  failure  is  full  of  hope;  for  to  address  one's  self 
directly  to  the  reformation  of  the  individual  is  admitted, 
from  an  instinct  born  of  centuries  of  untoward  experience, 
to  be  a  most  discouraging  task,  fit  only  for  those  who 
know  not  only  how  to  die  but  how  to  fail  endlessly,  to 
combat  "  original  sin,"  fit  foeman  for  a  Deity.  But  to 
address  one's  self  to  the  reformation  of  an  environment, 
impersonal  and  non-resisting  except  from  inertia,  calling 
only  for  industry,  intelligence  and  some  faith,  for  address 
to  the  intellect  rather  than  to  human  nature,  in  order  that 
first  the  institution  and  then  the  individual  may  be 
reformed,  is  a  task  full  of  hope. 


ETHICAL    SYNTHESIS  599 

When  the  progress-loving  world  once  really  sets  Its 
hand  to  this  true  throttle  of  ethical  motives:  institutional 
economic  environment,  and  opens  it,  then  will  be,  not 
the  millennium  perhaps,  but  certainly  the  greatest  single 
step  toward  it  which  the  world  has  ever  yet  seen  actually 
accomplished.  For  not  only  is  there  here  in  this  couatry 
to-day  a  surer  control  of  institutional  environment,  in  the 
freedom  of  political  life  of  which  we  are  so  proud,  than 
ever  existed  anywhere  before,  but  Its  effects  shall  spread 
abroad,  like  a  tidal  wave,  over  a  vaster  concourse  of 
peoples  than  might  ever  before  have  been  reached.  It 
is  not  only  that  what  the  .American  nation  once  spon- 
taneously undertakes  is  done  with  greater  speed  and 
thoroughness,  and  upon  enormously  larger  scale,  than  his- 
tory records  elsewhere.  It  is  that  the  fruits  of  her  might 
and  right  can  no  longer  stay  at  home.  With  all  the  mate- 
rial instruments  of  bond  between  man  and  man,  with  the 
railroad  and  the  steamship  and  the  telegraph  firmly  within 
her  grasp,  with  that  commercial  and  military  preeminence 
which  makes  them  effective  already  hers,  with  a  popula- 
tion already  pressing  hard,  in  its  lusty  growth,  against 
the  confines  of  country  and  of  conscience,  this  vigorous 
young  Republic  possesses  a  greater  potentiality  for  the 
development  of  world-wide  material  prosperity  and  moral 
welfare,  by  the  proper  application  of  her  skill  and  energy, 
than  has  any  other  single  Power  upon  the  globe.  But 
not  in  the  odious  comparison  of  horrid  war  is  this  supe- 
riority to  be  demonstrated.  It  is  in  her  superior  courage 
In  demonstrating  the  fitness  of  peace,  internal  as  well  as 
international,  to  survive  over  war;  it  is  in  her  greater  firm- 
ness of  democratic  faith,  in  her  willingness  to  rest  her 
national  fortunes  upon  these  synonyms,  love  and  justice, 
as  a  foundation,  upon  the  absolute  equality  of  each  man 
in  his  institutional  relations  with  all  other  men.     It  Is  in 


6oo  THE    COST    OF    COMPETITION 

her  command  of  these  principles  of  conduct  of  national 
life,  already  formulated  as  the  basis  of  our  constitution, 
already  preached  in  every  Independence-Day  oration  and 
already  denied  each  morning  by  each  profit-seeking  citizen 
before  the  cock  crows  twice,  that  she  is  to  prove  her 
peaceful  command  of  the  later,  really  civilized  world. 
In  Venezuela,  in  Cuba,  in  China  and  in  Manchuria  she 
has  stood  and  is  standing  courageously,  consistently  and 
firmly  for  liberty  of  natural  growth :  the  one  world-power 
most  effective  as  to  actual  result,  no  matter  what  might 
be  the  outcome  of  supposititious  war,  of  all  the  scheming 
others.  Within  the  last  six  years,  in  spite  of  inevitable 
mistakes,  she  has  made  not  only  a  new  Cuba  and  a  new 
Philippines,  but  a  new  Spain  and  a  new  Pacific.  Within 
twenty-five  years  she  has  helped  to  make  a  new  Japan, — 
a  Japan  which  has  challenged  the  admiration  of  the 
occidental  world  by  the  marvelous  success  attending  its 
adoption  of  western  science,  coupled  with  a  patriotism 
too  pure  to  copy  western  commercial  examples,  a 
Japan  which  already  suggests  what  America  may  be  when 
its  commercialism  is  eliminated  by  the  abolition  of  barter. 
There  are  even  now  indications  that  she  may  have  been 
able  to  preserve  old  China  and  to  effect  a  new  Russia, 
— a  Russia  soon  to  be  equipped  with  a  constitutional  gov- 
ernment born  of  wholesome  failure  without  and  within  and 
now  for  the  first  time  really  started  toward  an  honorable, 
healthy  prosperity.^  Situated  as  is  the  United  States, 
topographically  and  ethnographically  the  center  of  the 
West,  facing  Occident  and  Orient  on  either  hand,  com- 
pounded in  her  blood  from  Latin,  Teuton  and  Celtic  races, 
no  single  flag  covers  anything  like  the  infinity  of  possibility 
for  development  of  national  self  and  for  peaceful,  benef- 
icent   influence    over    her    independent    and    dependent 

"Written  in  the  summer  of  1903. 


ETHICAL    SYNTHESIS  6oi 

neighbors  as  does  our  own.  No  flag  represents  anything 
like  our  possible  unity  of  purpose  to  accomplish  this 
thing. 

The  socialists  dream  beautifully  of  a  unified  human 
race.  Their  red  flag  of  one  common  blood  symbolizes 
the  noblest  ideal  now  offered  to  civilization  for  compre- 
hension and  adoption:  a  world  of  peoples  embodying  in 
their  political  relationship  the  brotherhood  of  man.  But 
the  first  step  toward  its  realization  is  a  unified  America, 
a  national  home  for  true  harmony  and  true  liberty, — for 
a  harmony  of  material  as  well  as  political  interests,  for  a 
liberty  of  hand  and  home  as  well  as  of  tongue  and  ballot, — 
a  house  of  Columbia  no  longer  divided  against  itself  by 
Barter. 


EPILOGUE 

TO  those  who  have  labored  with  the  author  to 
the  end  of  these  many  pages  and  have  picked 
up  somewhat  of  their  spirit,  it  may  be  of  interest 
to  note  the  history  of  their  origin. 

In  1889  the  writer  was  Hving  In  Boston.  He  had 
read  Edward  Bellamy's  "  Looking  Backward,"  and  it  had 
set  him  to  thinking.  Indeed,  he  had  already  been  con- 
siderably stimulated  to  serious  thought  as  to  the  social 
problem  by  the  reading  of  Henry  George's  "  Progress 
and  Poverty,"  and  now  this  added  light  upon  the  extent 
and  depth  of  the  evil  called  for  prompt  decision  as  to 
what  attitude  was  to  be  assumed  toward  the  question : 
whether  it  was  to  be  considered  a  "  calamity-howl  "  or  a 
tempest  In  a  teapot,  or  to  be  regarded  as  as  big  and  as 
urgent  as  It  appeared  to  be.  As  a  means  to  this  end  a 
day  or  two  of  vacation  was  taken,  at  the  shore,  with  one's 
back  on  the  sands  and  one's  eye  on  the  clouds.  At  the 
end  of  that  time  there  was  no  longer  any  doubt :  It  had 
become  painfully  clear  that  the  spirit  of  competition  (for 
the  fact  of  it  was  already  familiar  from  commercial 
experience)  was  that  of  the  prize-ring,  or  worse.  Another 
fact  had  also  become  clear,  and  that  was  that  the  writer 
from  that  time  on  was  enlisted  upon  a  campaign  for  Its 
extermination. 

The  publication  of  "  Looking  Backward  "  had  led  to 
the  formation,  In  Boston,  of  "  The  First  Nationalist 
Club,"  to  be  followed  rapidly  by  many  others,  and  to  the 
publication   of   the   monthly  magazine,    The  Nationalist, 

602 


EPILOGUE  603 

With  this  movement  the  writer  naturally  came  into  con- 
tact, and  allied  himself  with  interest.  The  movement  did 
not  last  long,  however.  Its  aim  was  good  and  its  work 
was  good,  but  it  was  ahead  of  the  time  destined  for  per- 
manent results,  or  even  for  continuity  of  method.  It 
broke  the  ground,  supplied  the  inspiration  and  revealed 
the  popular  willingness  to  respond;  but  It  failed  to  offer 
a  concrete  programme  capable  of  immediate  furtherance. 
Its  body  soon  fell  away,  but  its  spirit  went  marching  on. 

One  day  during  that  winter  I  returned  from  a  long, 
tiresome  day  of  local  travel  to  keep  an  appointment  at  six 
with  Sylvester  Baxter.  He  led  me  down  a  little  blind-end 
alley  leading  off  from  Milk  Street  and  supporting  a  row 
of  old-time  residences,  then  already  lost  in  the  mass  of 
commercial  life  about  them  and  since  disappeared  alto- 
gether. One  of  these  was  then  the  birthplace  of 
Mieusset's  cafe.  Through  its  narrow  front-entry  we 
went,  past  the  host's  tiny  bar,  up  a  flight  of  erstwhile 
domestic  stairs  and  out  into  a  diminutive  roof-garden 
situated  over  the  rear  extension  of  the  house.  It  was  not, 
however,  a  roof-garden  in  the  modern  sense,  for  every- 
thing from  the  vines  growing  overhead  to  the  vin  compris 
on  the  table,  was  what  it  pretended  to  be.  Here  I  found 
seated  a  circle  of  enthusiasts  over  national  cooperation, 
assembled  to  eat  "  Dutch  treat "  together,  to  discuss 
industrial  possibilities  for  the  future  and  to  consider  ways 
and  means  for  furthering  them.  The  assembly  was  styled 
"  The  Cold-cut  Club,"  it  being  forbidden  in  its  constitu- 
tion for  a  committee  to  arrange  a  meeting  over  a  hot  or 
formal  dinner. 

The  meetings  of  this  little  group  constitute  one  of  the 
most  pleasant  memories  of  my  life.  They  were  absolutely 
informal.  To  wish  to  come  was  the  only  eligibility 
demanded  for  admission;  to  eat,  drink  and  make  a  speech. 


6o4  THE    COST   OF    COMPETITION 

regardless  of  endless  Interruption,  the  only  price  of  free- 
dom to  depart.  Any  man  might  bring  a  guest,  subject  to 
the  same  conditions,  and  many  and  varied  were  the  inter- 
esting guests  we  had :  doctor,  lawyer,  poet,  painter,  editor 
and  legislator.  The  only  trouble  with  the  whole  thing 
was  its  popularity;  it  grew  beyond  wholesome  bounds, 
was  paralleled  and  copied,  and  died  finally  an  honorable 
death  of  apoplectic  prosperity. 

If  I  said  that  the  center  of  these  meetings  was  Edward 
Bellamy  I  should  mislead.  The  center  of  all  interest, 
enthusiasm  and  affection  he  certainly  was,  and  never 
flagging  in  the  zeal  which  finally  killed  him.  But  a  more 
modest  man  I  never  knew.  He  came  more  as  a  guest 
than  as  a  leader,  taking  no  part  in  the  organization  or 
administration,  always  needing  urging  to  get  him  on  his 
feet.  But  the  shrewdness  of  his  digest  of  the  progress 
of  the  day  and  the  kindliness  of  his  eye  I  shall  never 
forget. 

Soon  after  that,  Mr.  Bellamy,  aided  by  Mason  A. 
Green  and  Henry  R.  Legate,  started  the  publication  of 
his  weekly  review  of  current  news  in  the  light  of 
nationalist  doctrine,  called  The  New  Nation.  In  the 
ofl^ce  of  this  sheet  arose  many  a  lively  discussion  of  tend- 
encies present  and  future,  and  it  was  in  these  that  the 
writer's  ideas  became  better  crystallized  and  formulated. 
Mr.  Bellamy  was  an  uncompromising  altruist.  "  There 
can  be  no  outcome  in  equilibrium  from  the  present  insta- 
bility," he  would  say  in  effect,  "  but  the  universal  accept- 
ance of  the  idea  that  all  men  work  for  all,  and  that,  out- 
side of  the  home,  there  is  to  be  no  '  mine  '  or  '  thine.' 
Once  grant  that  the  people  are  to  operate  the  street-rail- 
roads and  they  will  not  only  reduce  the  fares  to  cost,  say 
three  cents,  but  fares  will  be  abolished  altogether,  so  that 
all  members  of  the  community  shall  pay  equally  for  who- 


EPILOGUE  605 

ever  chooses  to  ride.  Once  admit  that  to  each  belongs 
what  he  produces,  to  the  inevitable  abolition  of  all  profit, 
interest,  dividends  and  rent  and  to  the  hopeless  pauper- 
izing of  those  who  cannot  produce,  and  the  community 
will  not  stop  there.  Instead  of  trying  to  attain  to  any 
just  distinction  between  individuals  as  to  their  produc- 
tivity, always  a  hopeless  task,  the  whole  Gordian  knot 
will  be  cut  by  the  community's  taking  from  each  all  that 
he  can  produce  and  returning  to  him.  all  that  he  can  con- 
sume. The  superior  individual  will  enjoy  life  better 
because  he  is  superior,  of  greater  strength  of  body,  mind 
and  heart,  getting  his  peace  of  mind  from  the  knowledge 
of  helpfulness  to  others;  the  poor  in  body  or  spirit  will 
be  punished,  if  punishment  they  ever  need,  by  that  worst 
form  of  all  contemnation,  pity.  The  quite  recalcitrant 
few,  of  course,  will  be  restrained  by  force,  as  now." 

This  is  the  position  of  the  consistent  altruist.  It  is  a 
higher  and  a  broader  position  than  my  own.  And  yet 
I  differ  with  it  now,  as  I  did  then,  to  the  extent  of  feeling 
that  there  is  inevitably  an  intermediate  step,  and  that 
upon  the  advocacy  of  this  step  a  consistent  position  may 
be  founded.  As  to  the  ultimate  outcome,  I  believe  that 
Bellamy  was  right;  but  there  lies  before  us  a  more  con- 
crete, practicable  step  than  the  inculcation  of  his  broad 
philosophy,  and  that  is  the  plain  conservation  to  each  man 
of  the  value  of  what  he  produces.  This  is  a  programme 
founded  upon  a  principle  of  commercial  right  which  is 
already  accepted  as  a  formula,  if  not  insisted  upon  as  a 
fact,  by  the  industrial  world;  and  it  is  within  the  indus- 
trial and  commercial  world,  not  upon  it,  that  whatever 
reform  is  to  be  accomplished  must  be  effected.  A  start 
from  these  premises  leads  one  inevitably,  by  the  path 
already  marked  out,  to  the  abolition  of  all  private  owner- 
ship of  tools  or  services  and  all  individual  manipulation 


6o6  THE    COST   OF   COMPETITION 

of  prices.  That  once  accomplished,  the  premises  are 
assured.  What  further  steps  this  one  may  lead  the  world 
into  I  know  not.  For  the  present  I  do  not  care.  So 
surely  as  it  is  true  and  right  that  to  each  man  should  be 
conserved  what  value  he  produces,  so  sure  am  I  that  the 
attainment  of  that  policy  will  constitute  a  true  advance 
and  assure  a  truer  happiness.  What  may  logically  follow 
then  is  not  to  be  feared. 

There  is  another  and  minor  personal  object  in  view  in 
this  work  than  the  general  political  one  just  outlined.  It 
is  the  rebuke  of  that  school  of  political  doctrine  which 
supports  class-privilege  and  legalized  selfishness  upon  a 
demonstration  of  its  necessity  from  a  "  scientific  "  basis, 
which  claims  that  the  worst  which  we  now  know  of  man- 
kind is  natural  to  the  extent  of  irremediability.  Natural 
in  one  sense  it  surely  is,  to  the  extent  of  being  the  inevi- 
table effect  of  a  concrete  cause;  but  irremediable  it  is  not, 
any  more  than  the  natural  difficulties  of  navigation  or 
agriculture  are  irremediable.  I  preach,  instead,  that  true 
science  and  true  religion  are  one;  that  it  is  not  only  the 
undevout  astronomer,  but  the  unphilanthropic,  who  is 
mad.  He  who  cannot  read  from  his  vernier  a  faith  in 
and  a  hope  for  all  things  made  by  God,  and  chief  of  all 
for  man,  has  not  read  it  accurately.  I  proclaim  the  faith 
that  he  who  starts  out,  consistently  and  earnestly,  from 
careful  observation,  with  the  inductive  methods  of  the 
Baconian  philosophy,  must  inevitably  end  up  with  the 
moral  principles  of  the  four  gospels  as  his  scientific  con- 
clusions. It  is  to  thus  rebuke  with  all  the  earnestness  at 
my  command  the  intellectual  superficiality,  as  well  as  the 
cruelty,  of  the  so-called  laissez-faire  school  of  political 
doctrine  which  was  one  of  the  minor  objects  in  undertak- 
ing this  work.  The  evidence  of  the  falsity  of  this  school 
has  long  been  palpably  available  to  any  man  who  would 


EPILOGUE  607 

seriously  undertake  sociological  study  with  that  proper 
sense  of  responsibility  to  the  community  and  of  faith  in 
man  which  must  exclude  trifling  and  ensure  success.  The 
reckless  superficiality  of  its  work  and  the  bigotry  of  its 
attitude,  in  the  face  of  all  this  evidence,  now  stand  as  the 
complete  explanation  of  why  the  people  have  remained 
untaught  by  scientific  theory,  of  why  they  have  not  yet 
heeded  the  lessons  of  their  bitter  experience,  of  why  it  is 
still  being  left  to  the  painful  force  of  iniquitous  circum- 
stance to  set  the  popular  foot  upon  the  path  of  reform, 
when  it  might  imaginably  have  been  initiated  by  peace- 
ful and  rational,  but  more  forceful,  discussion.  If  we 
should  ever  find  that  we  had  followed  France  and  Russia 
in  inviting  violent  revolution — as  might  already  appear 
to  be  the  case,  from  Homestead,  Chicago  and  Colorado, — 
by  the  stupidity  of  our  conservatism,  it  Is  this  par- 
ticular school  of  public  writers  which  we  shall  then  have 
to  thank,  almost  exclusively,  for  our  affliction. 


INDEX 


INDEX 


PAGE 

Abolition  of  barter        .  .  '        .  .  .  .  .      529 

Economic  gain  from  the  ....       549,  560 

Accountance    defined     ......  26,   57 

Activities,  not  avocations,  the  guide  .  .  59,  87,   166 

not  conscience,  the  guide         .  .  .        216,  227,  241 

Advertising.     Futility  of        .          .          .           .           .172,  248 
Cost    of 247 

Aesthetics  ........      487 

Architecture         ........      490 

Art.    The  term  defined  for  the  present  argument        .  .      401 

discussed       ........      487 

Barter.     Chapter  on     .  .  .  .  .  .  .69 

Preliminary  definition  of         .  .  .  .  .69 

Further  definition  of      .  .  .  .  .  73»  95 

illustrated  .......        76 

displayed  in  tabular  form         .  .  .  .  .143 

a  negative  of  productivity         .....        80 

a  parasite     .  .  .  .  .  .  .  .81 

Internal,    or    horizontal    competition  ...        84 

Evolution   of,    in    America       .  .         241,  254,  257,  274 

Ethical  nature  of  ......      359 

The  abolition  of        .      .  .  .  .  .  .      529 

Economic  gain  from  the  abolition  of  .  .       549,  560 

Effect  upon  the  Individual  of  the  abolition  of        .  .      567 

Barter-cost    defined       .  .  .  .  .  .  .156 

measured      ........      220 

Capital.     Preliminary  definition       .  .  .  .  .18 

and  raw  material  .  .  .  .  .  .19 

contrasted  with  capitalism        .  .  .  .       113,  516 

Capitalism,   defined       .  .  .  .  .  .  .114 

The  passivity  of    .  .  .  .  .  .  .      207 

Census.     U.  S.     as  a  basis  for  the  study  of  the  evolution 

of   barter     ........      241 

611 


•  531 

•  197 
.     490 

59 

217,    221 
.       242 

.       98 
go 


6i2  INDEX 

PAGE 

Central  Office,  defined  ......        56 

applied  to  the  country  as  a  whole    . 
Circulation   within    the   economic   organism 
Civic    decoration  ..... 

Classification,  by  activities  instead  of  by  individuals 
Density  of  population  within  the  same 
by  Avocations        ..... 

Competition,  Chapter  on         ...  . 

first    defined  ..... 

first  identified   with  barter  and   contrasted  with   emu 

lation  .....     87,  91,  94,   144 

contrasted  with  emulation  by  parallel  column       .  .        99 

Vertical        ........      202 

Vertical   and   horizontal  .  .         123,  207,  212,  273 

Evolutionary  tendencies  in       .  .  .  .  .      207 

an  economic  aristocrat    .  .  .  .  .  .253 

and  corruption  especially  American    .  .  .  .431 

Concentration   of   competitive   effort         .  .  .  .166 

Congestion  ........      285 

a  result  of  traffic-facilities,  not  of  a  lack  of  them  .      297 

The  ethical  effects  of      .  .  .  .  .  .      494 

Conservation   of   economic  energy  .  .  .  .150 

Consolidation  in  manufacturing  establishments  .  .      273 

Consumption  (economic)   defined     ....  29,  33 

Chapter  on  Production  and      .  .  .  .  .16 

Demand  and  .  .  .  .  .  .  .169 

Production  and,  in  balance      .....      282 

Consumption     (tuberculosis)  ....       188,   314 

Cooperation,   The  economic  gain  from       .  .  .         40,   549 

Coordination.     Chapter  on  Specialization  and  .  .        35 

Corruption,  defined  for  the  present  argument      .  .  .      401 

The  causes  of         ....  .  298,  428-451 

and  competition,  especially  American         .  .  .431 

Crime,    The  causes  of  .....      298,  426 

The  growth  of     .  .  .  .  .  ,  .301 

defined  for  the  present  argument        ....      401 

The  ethics  of         ......  .      403 

Cycle,     The  biological,  of  production  and  consumption        .        16 
The   economic-biological  .  .  .  .  -159 

Efficiency  of  the  economic         .  .  .  .  .160 

The  daily,  of  life,  .  .  .  .  .  .415 


INDEX 

Decreasing  Returns.      The  laiv  of 

Mathematical  statement  of 
Degeneration.     Artificial 
Demand.     The  curve  of 

and  consumption 

Chapter   on    Supply   and 
Depreciation,    defined 

further  explained 
Design,  defined  as  one  department  of  productive  labor 
Diminishing  Returns.      The  law  of 

Mathematical  statement  of 
Dissipation.      Economic  ....        140, 

displayed  in  contrast  with  Production 

Biological  and  economic,  contrasted 

Growth  of  economic,  chapter  on 

Growth  of  industrial  inefficiency  due  to  economic 

The  abolition  of  economic 
Distribution,  defined 

of  purchasing-power 

The  fundamental  law  of 

The  second  law  of 

The  rigidity  of  the  laws  of 

within   Division   II. 

The  actual  proportions  of 
Divisions,    The  two  economic,  of  Society,  displayed 
Earning-efjiciency ,   defined 

illustrated  .... 

Economic  Organism.   The 

Circulation  within  the 
Education,  defined  for  the  present  argument 

Present  policies  in  .  .  . 

Efficiency  of  the  industrial  body 
Element  of  economic  society.     The 
Emulation.    Chapter  on  and  first  definition 

contrasted  with  competition  .  .     87,  91, 

ditto  by  parallel   column 

Ethical  contrast  of,  with  competition 
Energy.   The  conservation  of  economic 

The  two  dimensions  of  economic 
Enforced   Idleness  .  .  .  .  .185, 

Equilibrium     Stable,  of  market 


i«i, 


613 

PAGE 
36 

45 

193 

.     323 

169 

.     316 

20 

•  117 
.  26 
.  36 
.  45 

144,   154 

•  143 
.  161 
.  231 
.  262 

.  529 
.      148 

.  153 
.  168 
.  178 
.      191 

209 
.     215 

142 
32 

221 

195,  200 

.      197 

.     401 

•  451 
165,  262 

•  317 
.        89 

>  94.  144 

99 

.  359 

.  150 

.  319 

188,  270 

.  332 


6i4 


INDEX 


Evolution  of  barter  in  America        .  .        241,  254, 

of  purchasing-power        ..... 

of  technical  productivity  and  human  enjoyment 

of  mankind  ..... 

Exchange,   defined  ..... 

Pure,  and  exchange  alloyed  with  barter 
Fees,  classified  as  wages         .... 
Fiction.     The  mold  of  modern 
Free  will.    The  doctrine  of  ... 

Genius.    The  repression  of     . 
Grou'tli.     The  source  of  community 

Natural,  vs.  artificial  degeneration 
Hangings.      Increase   in   number  of 
Homicides  "  "  "  "  . 

Horizontal  competition,  defined 

within  the  several  layers  of  society  compared 
Idleness.     Enforced       .  .  .  .  .185, 

Income  and  purchasing-power         .... 
Increasing  Returns.     The  law  of    . 
Individual.     Effects  of  barter  upon  the  welfare  of  the 

Injustice  to  the     ...... 

Effect  of  the  abolition  of  barter  upon  the    . 
Inefficiency  of  the  industrial  body    .... 
Insanity.     The  increase  of      . 

Interest,  defined  and  discussed  .  .  1 14-125, 

Invention    defined  as  one  form  of  productive  labor 

The  place  of,  in  economic  coordination       127,   128, 

The  growth  of  science  and,  contrasted  with  the  prog 
of    individual   welfare       .  76,   168,  221, 

JournalisTn.      The   mold   of   modern 
Land.     Definition  of  the  economic  term 

The  struggle  over  the     . 
Landlordism.     The  term   defined 

discussed       ..... 
Laws.   The  natural  law  of  diminishing  returns 

The  natural  law  of  increasing  returns 

The  first  and  second  laws  of  distribution 

The  rigidity  of  the  law  of  distribution 

The  classification  of  civil  law  as  a  sort  of  barter 

14:^,  14.6, 


PAGE 

257,  273 
.   260 

.   257 
.  577 

•  54 
.   62 

32 

•  479 
.   407 

190,  378 
.  161 
.  181 
.  308 
.   308 

123,  207 


209,214 
[88,  270 
158 

44 

221 

267 

567 

262 

298 

155,  516 

.   26 

136,  137 

ress 

232,  257 
.  479 
17.  132 
.  286 

135.  139 

.  286 

36,  45 

44 

168,  178 

•   191 
243,  244 


INDEX 

Libraries.      The  public 
Life.     The  object  of    . 

The  value  of         ,  .  . 

The  elasticity  of,  under  pressure 
Literature.      The    mold    of    modern 
Lynchings.     The  increase  in  the  number  of 
Alalthus.      The   doctrine   of 
Market.    The  present  unnatural  distortion  of 
Market-equilibrium 
Market-price 

Money        .... 
Money-scale.    The,  defined    . 

The  proportions  of  the 
Murder.    The  growth  of  the  prevalence  of 

The  causes  of  the  prevalence  of 
Natural  price.     The     . 

wage.     The 

The,  price  and  wage  contrasted 
Organism.     The  economic 
Overproduction 
Pauperism.     The  cause  of 

The  growth  of      . 
Price    contrasted    with    Value 

defined  .... 

The  natural 

-tendency  under  barter 
Production.    TTementary  analysis  of 

defined,  analyzed  and  displayed  in  tabul; 

further  defined 

The  continuity  of,   and  consumption 

The  balance  of,  and  consumption 

and  economic  dissipation,  displayed 
Productivity   defined 

The  fate  of  the,  of  the  individual 
Profit.    Gross,  defined 

Net,   defined 
Prostitution.     The  causes  of 

The   prevalence   of 
Public  and  private  operation  of  industry 

The  comparative  cost  of 


the 


fo: 


615 

PAGE 

•  474 
4 
8 

.  418 

465,  479 

.  308 

.  38 

.  173 

•  331 
.  73 
.  148 
.  152 
.  216 

•  308 
.  426 

74.  530 

•  532 

•  533 
195,  197,  201 
151,  170,  175 

.   222 

.  298 

12 

73,  151 

74.  530 

79 

23 

■m      27-29 

.   67 

33 

.  282 

144,  255,  257 

.  32,  73,  95 

.  222 

•  155 
.   156 

298,  420 
.  422 

.  533 


6i6 


INDEX 


Purchaser.     Distinction  of  the,  from  the  consumer 
Purchasing-power 

The  social  distribution  of 

Income    and 

Controlling    importance   of 

Less  than   productivity 
Race-track  analogy.      The 
Raw    material,    defined 
Rent.     The  term  defined 

Natural 

Commercial 
Returns.   The  laws  of  decreasing  and  increasing 
Salary   classified   as  a  sort  of  wages 
School.     The  public 

The  "  laissez-faire,"  of  economics 
Science.     The  growth  of,  and  invention  powerless  to 

individual    welfare         .  .         76,   168,  221, 

Society.     All  levels  of,  affected  by  barter 

in  analogy  to  the  race-track  pool 
Specialization.    The  gain  from 

and  coordination 

upon  barter 

upon   vertical   competition 
Stage.    The  modern 
Starvation-wage.      The 
Statistics.     The  futility  of 
Submerged    Tenth.     The 
Success.     The  double  nature  of  commercial 
Suicide.     The  cause  of  the  prevalence  of 

The  growth  of  the  prevalence  of,  in  America 

The  growth  of  the  prevalence  of,  in  England 
Superintendence,    defined 
Supply  and  demand 

The  curve  of 

The  law  of,  and  demand 

The  distortion  of  this  law 

and  demand  freed  from  the  brake 

The  natural  operation  of,  and  demand      532,  549, 
Theatre.     The   modern 
Tools.     The  term  defined 


PAGE 

33 

168 

153 
158 
172 
169,  222 

18, 
132, 
134. 
136, 

36, 


.39, 
aid 

233.  257 


231. 


189 

237 
40 

35 
II I 
280 

479 
184 
186 
185 

87 
298 
312 
315 

25 
316 

329 

333 

335 

338,  558 

558,  571 

•      479 

.        18 


INDEX 

Transformation,    defined    as    one    department    of 

tion 23, 

Transportation,    defined    as    one    department    of 
tion  .....  23, 

Tuberculosis 
U  nder-purchasing-power 
Unemployment,  a   function   of   the   volume   of 

The  dilution  of 

Enforced 
Valuation  defined,  in  contrast  with  Vah 
Value,    defined 

and   price 

and  Valuation 
Vertical    Competition,    defined 

The  reaction  to,  from  below 

Specialization  upon 
fVage.     The  starvation 

The  natural 
Wages.     The  term  defined    . 

The  law  of 
Wage-system.    The  competitive 
Wealth,   defined 
Will.    The  doctrine  of  free    . 

The  human,  a  form  of  potential  energy 


prod 
28, 
prod 
28, 


barter 


uc- 

67, 
uc- 

67, 
188, 

175. 


10, 

3, 


13, 
1 1, 


123,   202, 


32, 


617 

PAGE 

142 

142 
314 

185 
188 
270 
149 
17 

12 

149 
207 
206 
280 
184 
532 

180 
181 
22 
407 
413 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

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